Question 1

How is a mortgage payment calculated?

Accepted Answer

Payment = P*r / (1 - (1 + r)^(-n)), where P is principal, r monthly rate (APR/12), n months. Taxes/insurance/HOA add on top.

Question 2

What is PMI and when does it drop?

Accepted Answer

Private Mortgage Insurance protects the lender when LTV > 80%. It typically drops around 78% LTV or by request at 80% with good history.

Question 3

How do extra payments help?

Accepted Answer

Extra principal reduces balance faster, shortening term and saving interest.

Question 4

Should I buy points?

Accepted Answer

Paying points lowers APR; compare breakeven time to how long you will keep the loan.

Question 5

What about escrow for taxes and insurance?

Accepted Answer

Escrow items are not part of principal & interest but are added to the monthly outlay.

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