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Questions About Mortgage Payments?

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 applied.

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 due date.