If you've never bought a home before, you may be surprised to learn that there's a lot to know about mortgages.<br />In its simplest form, a mortgage is a type of loan. It's used for buying a home, and it's repaid in monthly installments--usually over 15 to 30 years.<br />According to Business Insider, the payment you finally end up paying for your mortgage actually covers a number of things.<br />The principal is the amount the lender gives you upfront. If you borrow $200,000 from the bank, then the principal is $200,000. A little of this is paid back each month.<br />But you'll also pay interest--the cost of your loan. The interest is built into your monthly payment.<br />You'll also pay property taxes, which are based on the assessed value of your home, and your mill levy--which varies depending on where you live.<br />Homeowners insurance is mandatory, too, and is built into the payment. In 2017, the average annual policy cost $1,211.<br />Finally, you'll also probably have to pay for private mortgage insurance, or PMI, costing from 0.2% to 2% of your loan principal per year.
