Does A Mortgage Payment Include The Taxes And The Insurance ?

Mandy asks…

Does a mortgage include property tax and insurance?

My girlfriend and I are looking at buying our first home.   The house is listed at $259,900.  The estimated mortgage that is being shown on the ad for the house is only $1,320.00.  So it seems that it is very cheap for that price. 

This is the first time that we have gone through this as being first time home buyers. I’m just curious that there are no other costs and that we can afford the payment.  And that includes everything so just want to make sure we really can afford it and no surprises.  Thanks.

admin answers:

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No.

Sorry but it looks like that $1,320.00 is more than likely nothing more than just the interest and principal.  Meaning that it does not include the taxes and the insurance that is most likely required by your lender for most first time home buyer loans.  Not to mention depending on what type of loan you are getting you will also have Principal Mortgage Insurance (PMI).

I know on many forms of Real Estate forms of advertising whether that be the internet or some kind of print advertising some really nice low payment.  Sorry to say that is not the full picture of what the real mortgage payment is.  Its not that its bait and switch its just not really giving the full picture.  It really is the payment for the loan but the reality is that it is not what your lender will require you to pay for the loan.  It is meant to entice you and get you to call for more information.

For example in Santa Barbara county using 1.25 of the purchase price not the loan amount then dividing by 12 will give us an estimate of your payment for taxes.   That will give you an extra $270.00 a month.  Now being that you are a first time home buyer and if you are not getting a VA loan and getting maybe a FHA loan you will be looking at PMI which is currently a 1.35% factor than divide by 12 giving you $282.00 additional on top of your loan payment.  Now you still have to get homeowners insurance which is required by the bank to have you can choose who you get insurance from, but lets just add $70.00.  So your real payment out the door with nothing else to add unless you are living in a gated area or something like that wiht homeowners Association fees (HOA) your REAL payment would be more like $1,942.00.  I hope this is more of a clear answer for you and good luck!


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