The original balance of money loaned. As the loan is paid over time, the principal is the remaining loan balance.

Interest

The charge for the use (loan) of money. The interest rate remains constant in a Fixed Rate Mortgage. The rate can vary according to specified guidelines over the life of an Adjustable Rate Mortgage (ARM).

Property Taxes

The county assessor charges property taxes based on the value of your home. Two tax installments are due each year. [Insert property tax due dates for your area.]

Insurance

Protection against loss resulting from certain hazards, such as theft or fire. The standard policy pays replacement costs, minus depreciation based on actual cash value. You will need to obtain homeowners insurance from your own insurance agent.

Private Mortgage Insurance (PMI)

Loans with smaller down payments involve greater risk for the lender, who requires protection in case the loan goes into foreclosure. Without PMI, lenders would be reluctant to offer loans with lower down payments. Anything less than 20% down payment usually requires PMI.