Mortgage Payment

2007-03-08 10:33:40

( Financial )



Mortgages and Loans
To clarify terms, a mortgage is an agreement that a piece of property will be used to repay a loan if the loan is not repaid by the debtor.
Mortgage payment is made in the form of an amortization. The amortization is the periodical payment of a portion of a loan. The value of the amortization will remain constant throughout the period of the loan. This value is computed based on the principal, plus interest per annum, divided over the number of payments in one year.

Biweekly Mortgage Payment
A biweekly mortgage payment is an amortization that is paid every two weeks, or twice a month.

Are Student Loan Payments Also Mortgage Payments?
Student loans are not granted with mortgages attached. Since no property is mortgaged to satisfy any unpaid debt, the loan payments are not amortizations.

Mortgage Payment Insurance
Mortgage payment insurance is an insurance taken out on a debtor so that in case of death of the payor, the loan amount will still be paid to the creditor. Mortgage payment insurance allows for the continuity of mortgage payment even after the death of the mortgagor. Mortgage payment insurance protects the creditor from the risk that a debtor may die in the middle of paying off a loan.

How Do Mortgage Payments Affect the Principal?
A single mortgage payment is applied against the interest before it is applied against the principal. Interest is always paid before principal; hence, depending on where you are in the payment schedule, a single mortgage payment may affect the principal in a small or big way. In the early years of a loan, the principal amount will hardly be reduced. This is how the payment scheme works. It can be depressing, but take heart, because the closer you are to paying off the loan, the greater the dent a mortgage payment will make in the principal.


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