How is my monthly payment calculated?
Monthly mortgage payments are primarily determined by three factors: the amount
of the loan, the term and the interest rate. The amount is how much is borrowed.
The term is basically the amount of time you have to pay it back. Interest is the
amount the lender charges for loaning you the money. We invite you to crunch some
numbers with our online mortgage calculators.
What is loan amortization?
Amortization is the process of paying off your mortgage through scheduled monthly
payments of principal and interest. M&T does not charge any prepayment penalties
so consider expediting things by paying a little more towards principal each month.
Even a small amount can help lower your interest payments and make you the king of your
castle even sooner.
What is P&I payment?
We know: you probably aren't excited about learning another acronym, but P&I
is easy: it stands for principal and interest that makes up your monthly mortgage
payment. If you elect to make only a P&I payment, you (the borrower) will need
to cover taxes and insurance on your own rather than including it as part of your
monthly payment (see next question on PITI).
OK, so What's a PITI payment?
Typically, monthly mortgage payments are broken down into four parts: principal,
interest, taxes and insurance, or, voila, PITI. By electing to include taxes and
insurance in your monthly payment, you won't have to worry about saving to pay these
annual bills. Each month a portion of your annual tax and insurance costs will be
collected in an escrow account. M&T will process those payments for you as needed.
Want to know more about escrow accounts?
How does an escrow account work?
If you don't want to deal with the hassle of managing property taxes and insurance
bills, a mortgage escrow account is the answer. It allows borrowers to pay ongoing
property tax and insurance costs within their monthly mortgage payments. These additional
funds accumulate in an escrow account managed by M&T Bank, and we take care
of paying property taxes, homeowners insurance or any mortgage insurance
for you. This helps lighten your load. To learn more, see what is a PITI payment?
What's missing from my monthly payment?
Without an escrow account, the cost of taxes and homeowner's insurance are not included
in your monthly mortgage payment. Aside from that, another cost not included in
your mortgage payment is Home Owner Association (HOA) maintenance dues – common
with condominiums and planned unit developments (PUDs).
Will my mortgage payment change?
Depending on your mortgage program, monthly payments may change. This most commonly
occurs with adjustable rate mortgages (ARMs).
After the initial fixed-rate term comes to a close, the interest rate can change
up or down depending on market conditions – meaning your monthly payment may fall
or rise. For instance, if after the fixed term, interest rates are lower than they
were when you first bought the home, you'll likely be looking at lower monthly payments.
Payments on fixed rate mortgages typically do not change unless you have an escrow
account with annual taxes and home owners insurance included in your monthly payments.
As your annual property tax and insurance costs change, the amount needed to cover
these costs in your monthly payment is impacted. If these costs increase, you can
opt to either have your future payments adjusted to cover the difference or pay
the difference in full to maintain your current payment.
How can I say "see ya" to my mortgage payment quicker?
If you're looking to expedite paying off your mortgage, consider making either an extra payment or a larger payment toward your principal balance. Additionally, you could consider a variety of refinance options allowing you to shorten your mortgage term. The good news is M&T Bank never penalizes customers for paying off their loan early. See more at how can I make an extra payment?
How can I make an extra payment?
If you find yourself in the position of having some extra money in your pocket once
in a while, consider making extra payments towards your mortgage principal balance.
Even a single extra payment to your loan balance can have an impact on reducing
your overall interest costs and shorten the term of your loan. Whether one extra
full payment or just a small amount each month, make sure you contact your lender
to let them know you're making an extra principal payment so your funds are correctly
Is it possible to skip a home loan payment?
You may have heard that you get to skip a mortgage payment or two with every new
mortgage loan. Well, not exactly. Typically, there is a gap between when your existing
mortgage is paid off and when your new mortgage payments begin – affording you a little
break. Spend it wisely!
When is my payment due?
We've made your payment due date super simple to remember: the 1st of
the month. Easy, right? Typically, you'll also have a 15 day grace period so you
don't have to stress about hitting the first of the month every time. Not paid until
the 4th of the month? That's OK, because as long as your payment is received
within 15 days of the due date, you won't see a late fee or a late payment notice!
So when is a payment late?
When is my mortgage payment considered late?
At M&T Bank, we want your credit score to remain as spotless as possible and
not blemished by late mortgage payments. This is why it's important to remember
your mortgage payment is considered late if it's paid 30 days after your official