Mortgages Come With Additional Costs

When buying a home you are actually paying for 3 things: principal, interest and fees.

Principal is the part of the monthly payment which actually pays down the loan balance. When a home is purchased, you agree to pay a certain price and the seller was paid immediately. The principal pays down what was given to the seller.

The interest is what your lender charges you for borrowing the money. This number is a percentage of the loan balance.

When a loan is taken out, you are likely have to pay fees and penalties such as an application fee (approx. $500), Title insurance (approx. $605), Attorney fees (approx. $445), Appraisal fees (approx. $327) and a credit report fee (approx. $29).