BETA
Demystifying the monthly payment
Most homeowners pay a single monthly sum known as PITI, which stands for Principal, Interest, Taxes, and Insurance. While the principal pays down the debt, the interest goes directly to the lender as profit.
Chapter 1
The birth of the 30-year loan
Chapter 2
How the money actually flows
Chapter 3
The invisible giant in the background
Chapter 4
Navigating your mortgage choices
Ch 2 · How the money actually flows
sloane Balance the down payment and interest rates to discover how home loans actually work.
sloane American Mortgage Money Flow
Your home loan's approved, yeah! (But it's quickly sold away!) To Fannie or Freddie's hands, (Then investors worldwide will pay!)
sloane Lenders set up special holding accounts to ensure property taxes and insurance are paid on time.
Fun Fact
Interest math: In the first year of a 30-year mortgage, over eighty percent of your monthly payment goes toward interest, not the house itself.
sloane Amortization is the mathematical formula that gradually shifts your payments from interest to principal over time.
Glossary
securitization (noun)
The process of pooling debt into financial instruments to sell them to investors. In 1970, Ginnie Mae issued the first mortgage-backed security, permanently changing how capital reaches home buyers.
The process of pooling debt into financial instruments to sell them to investors. In 1970, Ginnie Mae issued the first mortgage-backed security, permanently changing how capital reaches home buyers.
Quiz
In the early years of a 30-year mortgage, where does the majority of your monthly payment go?
Quiz
If you make a larger down payment on a home, how does it affect your monthly payments?