Understanding the building-blocks of a mortgage may help you compare your options. Your monthly payment is based on a complex calculation that changes over time, so “getting the picture” can be tricky!
The biggest pieces are:
- Loan Amount
- Interest Rate
- Term (years to pay off)
- Payment Schedule
- Down Payment
Down payment and equity are of course closely related, but remember that your equity changes as loan payoff proceeds.
This short video visualizes the way these factors relate to help you make sense of the math.