Why Rent When You Can Buy? Navigating Mortgage Payments in Your 20s
CMS Mortgage Solutions Inc.
CMS Mortgage Solutions Inc.
Published on June 13, 2022
Why Rent When You Can Buy? Navigating Mortgage Payments in Your 20s - CMS Mortgage Solutions

Why Rent When You Can Buy? Navigating Mortgage Payments in Your 20s

It is no secret that buying a home is a huge financial commitment. For many young people, it can be the best investment they ever make. By carefully navigating mortgage payments in your 20s, you can set yourself up for a lifetime of financial security. But what’s included in a mortgage payment? In this blog post, we’ll break down everything you need to know about your mortgage payment so it isn’t so daunting.

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What is a Mortgage Payment?

A mortgage payment is how you repay your home loan. This will most likely be a monthly payment that you as the borrower will pay to a lender in order to reduce the principal balance of your loan and cover interest charges. The majority of the time, a mortgage payment includes principal, interest, escrow fees, and private mortgage insurance (PMI). The total amount of a mortgage payment will be determined by the size of the mortgage and the interest rate you as a buyer select.

What All Is Included In Your Mortgage Payment?


The basic mortgage payment consists of two main components: principal and interest. The principal is the loan amount you initially borrow from a lender to buy your home. It’s factored into your monthly payment and paid off throughout the life of your loan.

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Once you purchase a home and begin making payments, the amount of principal you pay each month is relatively low. As the loan ages, more and more of your monthly payment will go toward the remaining principal amount.


The interest rate on a mortgage is one of the most crucial elements in determining the monthly payment. The higher the interest rate, the more money you will have to pay each month. Interest rates are generally stated as percentages, and they can vary significantly from one lender to the next. Before selecting a lender, you should compare interest rates and ask if there are any fees associated with the loan.


Your property tax bill is calculated as a percentage of the assessed value, which can fluctuate from year to year. The amount you pay will be determined in large part by local taxes and how much your home’s market-based price rises or falls in relation to other similar homes around it, as well as your county’s taxation system.

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There are two types of insurance that might impact your mortgage payments:

  • Homeowners Insurance: The cost of a homeowners insurance policy is dependent on the type of policy you choose. Its main purpose is that if something were to happen, like an environmental catastrophe or an accident on your property, homeowners insurance would generally cover the expense of repairs to restore your property’s value to where it was before.


  • Mortgage insurance: Mortgage insurance isn’t applicable to everyone, but if you’re starting out young, it might be for you. If you can’t make a large down payment on your house, PMI can be a helpful tool. Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get. Typically, borrowers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance.


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When Do You Make The Mortgage Payment?

Once the loan process has been completed, your first mortgage payment will be due the first full month after your closing date.

While monthly payments are standard, you may also have the option to make bi-weekly payments.

One of the most important habits for young borrowers to get into is making sure their payments are on time. It is ideal to send your payment within the first few days of the month to avoid late fees. Beyond a possible late fee, lenders may also report missed or late payments to the credit bureau which can damage your credit score and make it difficult to get future loans.

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How Do You Actually Make The Payment?

This is the easy part, you can pay your mortgage online! A big tip for young borrowers is setting up auto-payments/transfers so there is no worrying about forgetting to send it on time. If you are more old-school, don’t worry, you can still make your payment in person or on the phone.

Can You Make Extra Payments?

Yes! The quicker you pay your mortgage the more money you’ll save in the long run. If this means adding a little extra each month or a larger chunk every once in a while, it could end up saving you thousands.

Always check with your lender before making extra payments during the month as they might have pre-payment penalties.

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Missing Mortgage Payments?

While you should always strive to have your payment on time, sometimes things happen and its a few days late. This shouldn’t be the end of the world as most lenders have grace periods that account for these occurrences, this doesn’t mean you should make it a habit to dip into them though.

If you are going to miss your mortgage payment, the best thing you can do is get in contact with your lender as soon as possible. They are there to work with you, but if you wait too long you can get hit with some nasty consequences like late fees and defaulting your loan.

Mortgage payments are an unavoidable part of homeownership. There are, however, ways to make them less inconvenient. The key is to understand what you’re getting into and go in with as much knowledge as possible. Talk to your lender about Interest rates, PMI, taxes, and other unexpected costs. You’re already taking the right steps as you can never be too prepared in these situations.

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CMS Mortgage Solutions Inc.
CMS Mortgage Solutions Inc. Virginia Beach
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(757) 558-2603