Many mortgage lenders include property taxes
and insurance right into the monthly mortgage! This eliminates one large
payment annually to your local tax officials and insurance company
and allows you to budget these expenses monthly. The amount of money the bank accepts
on your behalf for property
taxes is referred to as ESCROW. To calculate the amount of monthly
ESCROW the bank would require in addition to your principal and
interest, take your average yearly proposed property taxes and divide by 12. Then
take your average annual home owners insurance cost and any private mortgage insurance
and divide by 12. Add these figures to your calculated monthly
principal & interest from above. This is how you arrive at
the total monthly mortgage payment.
