What Are the Mortgage Costs in Warrensburg, Missouri?

Hi Guys and Gals! Today we are talking aboout what all is included in a mortgage payment and how much will it cost to live in in Warrensburg, Missouri?!

Okay so, what is a mortgage payment? What are the different parts of your mortgage?

There's actually four parts to your mortage payment - and these four parts can actually be broken down into an acronym called : P.I.T.I.

Principal
Interest
Taxes
Insurance

To start, we'll talk about Pricipal. The Principal is the amount on your loan that you are paying monthly, which goes towards lowering the total amount you owe the bank for your house. For example, if you recieved a loan for $150,00. Your Principal amount would be $150,000. Attached onto this is something called Amortization.

And what that big fancy word means is that every month you make a payment on your mortgage, the amount that you're paying towards your Principal (the actual amount you owe the bank) goes up, and the amount of Interest you pay on that loan, goes down.

What is Interest?

Interest is basically just the amount you're paying to the bank to give you the loan in the first place. This percentage can vary from bank to bank and lender to lender depening on how the market is doing and what your credit looks like. Interest rates can be anywhere from 3.5% to 9% (they vary quite a bit). They change and fluctuate from year to year. So eith Interest, you are paying a percentage on the total amount (Principal) the bank gave you to purchase your home.

Moving on! Let's talk about Taxes. What are Real Estate Taxes? These are basically the taxes that you pay yearly, to own a home. These taxes go to things like the schools in the area and towards road and sidewalk maintenence etc, so they're not a terrible thing necessarily.

Real Estate Taxes usually go up very slightly every year. You can usually guage what you're paying the following year, based on the year before. With most mortgage payments - your taxes are added onto your mortgage payment (along with the insurance) and you make one big monthly payment to the bank every month. Then, at the end of the year, your bank pays the yearly taxes on your home.

Lastly, lets talk about Insurance. Insurance is required by the bank if you have a mortgage. If your home is fully paid off, Insurance is not required (though I HIGHLY recommend it). The reason behind why banks insist on Insurance is that if there's something like a fire, or a tornado etc.. you can get money from the Insurance company to rebuild your house and then keep paying on your mortgage (the money you owe the bank) essentially. They are shoring up their investment in you and your property.

Most of the time your insurance is part of your mortage payment and that goes directly to the bank (like for your taxes) - and then they pay the insurance company directly. Easy Peasy.

And there you have it! In my video I give a couple examples of the prices of taxes and insurance on different size homes in Warrensburg and Knob Noster. So, if you're interested in seeing the actual figures, check it out!