Bob Northern & Company
12540 Patterson Ave
Richmond, VA 23238
Tel: 804-708-9463 • Fax: 804-708-9467
Financial Information
How can I calculate my house payment?

Is there an easy way to calculate a house payment.

How can I calculate my house payment?

Most house payments consist of principal, interest, taxes, and homeowner’s insurance. Payments are contained in your one monthly payment to your mortgage company.

Principal - the part of your monthly payment that is actually credited towards paying your loan off
Interest - monthly payment to pay the interest on the debt
Taxes - 1/12th of your annual real estate tax bill. This amount is paid into your escrow account from which your mortgage company pays the entire bill each year when the real estate taxes are due. In Chesterfield, Henrico and Hanover counties, the taxes are paid semi-annually on June 5th and December 5th. The City of Richmond taxes are due once a year on June 15th. Goochland, Powhatan, Louisa, King William and New Kent counties are due once annually on December 5th.
Insurance - 1/12th of your annual fire or homeowners insurance policy is paid into your escrow account and the annual insurance premium is paid by your mortgage company when due. Fire and homeowners insurance policies are always prepaid at least 12 months in advance. You need to prepay your first year of insurance at closing. This is called a prepaid item.
P.M.I. - private mortgage insurance. If your down payment is less than 20%, lenders require a private mortgage insurance premium to protect the lender's mortgage investment if you default on your payments. Normally, P.M.I. can drop off if you can prove to your mortgage company that your loan amount is no higher than 80% loan to value (L.T.V.)
Association Fees: Townhouses and condominiums require fees to be paid to the homeowners association. These fees are separate from the mortgage payment. They are included in the ratios when a buyer is qualifying for a loan. They are included in the "front end" ratio when you qualify for your loan.
An easy way to remember what a payment consist of is:
It's a "PITI" to have to make a payment:

(P) principal, (I) interest, (T) taxes, (I) insurance

Note: House payments are due on the first day of the month. There is a grace period before a late charge is attached, but they are due on the first of the month.

House payments are paid in arrears. Rent is paid in advance.

Banks can't charge you the interest on your house payment until you use the money for a month! This is why they are paid in arrears.