Understanding the true costs of your new mortgage is very important in getting a firm grasp of your financial future. Sometimes the information can be overwhelming but once you understand the basics, everything else will fall in place. The total cost of a mortgage is comprised of four main elements:

1. P - Principal
2. I - Interest
3. T - Taxes
4. I - Insurance

PITI is part of the formula that mortgage lenders use when calculating your affordability ratios. Many times home buyers ignore these additional costs when figuring how much of a home they can afford.

Principal
Principal represents the amount you borrow, which has to be repaid over time.

Interest
Interest is the cost that mortgage lenders charge for the use of their money during your repayment schedule.
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According to the Mortgage Bankers Association, mortgage applications rose another 7.5 percent last week compared to the previous week.

This increase was due in part to a rush to refinance when the Federal Reserve cut rates by three-quarters of a percent as a response to recession fears. The refinance share of last week’s mortgage activity was 73 percent, up from 60 percent the previous week.

Mortgage rates rose:

• 30-year fixed-rate mortgages increased to 5.6 percent from 5.49 percent.
• 15-year fixed-rate mortgages increased to 5.04 percent from 4.96 percent.
• 1-year ARMs increased to 5.7 percent from 5.51 percent.

We are seeing a lot of our past clients in McKinney, Plano and Frisco refinancing their homes. We have also seen an incredible increase in website traffic with people looking for homes in the Flower Mound and Grapevine area as well as in the North Dallas areas.

If you are interested in purchasing a home in the Dallas Fort Worth Metroplex please call us at 800-326-9011. If you are interested in refinancing your home or would like to get pre-approved for a new home, fill out our secure online mortgage application for a free pre-approval.