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So what will my mortgage cover?

Most loans have 4 parts: principal, the repayment of the amount you actually borrowed; interest, payment to the lender for the money you've borrowed; homeowners insurance, a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes, the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you will pay far more in interest than you will in principal, sometimes as much as two or three times more! Because of the way loans are structured, in the first years you will be paying mostly interest in your monthly payments. The interest payment is deductable on your federal income taxes. In the final years, you will be paying mostly principal.

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