As we have already mentioned, your mortgage loan commitment comprises two essential parts, one of them is your principal mortgage payment which you are actually quoted by your mortgage lender or home mortgage company, and the second part is your mortgage loan interest rate. That’s the amount you pay to the mortgage lender for him lending you the money for purchasing your new house. Does that make sense? Absolutely.

However, don’t leave taxes and insurance out of sight. They are to be paid as well, and they should be also included into your mortgage loan payments. Some of your funds will be placed onto a special escrow account for covering taxes and insurance associated fees. Your mortgage lender will withdraw money from your account and pay fees on your loan.

An escrow account is often setup by your mortgage lender when you put down less than he expects at closing. Usually, what satisfies almost every mortgage company is a down payment of 20 percent at closing. Very few people can afford a down payment that big on their mortgage loan, and they are required to initiate a private mortgage insurance payable from the escrow account.