What are the components of a mortgage payment?

A monthly mortgage payment consists of four (4) parts combined as PITI.  P is Principle, the amount of money you are borrowing for your purchase; I is Interest, the amount charged from the Lender for loaning you the money; T is Taxes, the annualized real estate taxes pro-rated for one (1) month; I is for Insurance, the annualized home owner’s insurance policy pro-rated for one (1) month.

What does LTV mean and why is it important?

LTV stands for Loan-To-Value.  For example:  If you are putting $20,000 down on a home you are purchasing for $100,000, your LTV = 80/20.  Typically, when your LTV is higher than 80/20 (85/15, 90/10), your Lender will charge you an additional premium to compensate for what they perceive to be “risk”.

How do I make sure I am not over paying for a home?

The front line level of protection is enlisting a Buyer’s Agent.  A seasoned Agent capable of accessing and interpreting MLS data will guide you to a fair purchase price.  Additionally, your Lender will perform an appraisal to ensure that the sales price and loan amount are in line with their appraised value.