Do I pay for the principle only or with tax and insurances?
I am a first time home buyer and I was carious if I would be making just the principle payment per month only or well the bank make me pay for insure and tax monthly? In other words, can I just make the principle payment and make a tax payment and insure a one-time payment at the end of the year?
Tags: insurances, Only', Principle
It all depends how it’s set up. But in my opinion you’d be much better off having the taxes and insurance included monthly, than to get hit with large bills for those items yearly.
By doing the taxes and insurance yearly, you would tend to forget about it and think that your costs are really lower than what they are.
You are much better off letting the lender set up an impound account for property taxes and insurance. In fact, many lenders require it. Talk to your lender.
Most lenders will ask you to pay principle & interest payments and ask you to pay house insurance 12 months in advance or via your monthly payments. You should however be free to insure your house the the insurance company of your choice. You may then have to name the lender on your insurance policy and give them a copy. You should talk to your lender to see if you can have an interest only mortgage loan. That would reduce you monthly repayments.
Hope this information is of some help. Good luck, Fred