Your monthly mortgage payment is made up of several components.  This housing expense is commonly referred to as "PITI" or Principal, Interest, Taxes and Insurance.  PMI (see below) and homeowners association dues may also make up a portion of your total payment.

1.  Principal
          The original balance of money loaned, excluding interest.  Also, the remaining balance of
           a loan, excluding interest.  The interest is calculated on the principal balance.

2.  Interest
          The charge for the use (loan) of money.

3.  Taxes
          The county assessor charges property tax based on the value of your home.  There are two
          tax installments due each year.  The first installment is due November 1'st and is delinquent
          on December 10'th.  The second installment is due February 1'st and is delinquent on April
          10'th.  Taxes may be impounded, depending on the amount of your downpayment (anything
          less than 20% requires an impound account.)  An impound account is a trust account set up
          by the lender to which a portion of the monthly payment is credited so that funds will be
          available for the payment of taxes and insurance.  This way, the lender actually pays your
          tax bill for you.  (Supplemental taxes are not included.)

4.  Hazard Insurance
          A contract that pays for loss on a home from certain hazards, including fire.  You obtain
          homeowner's insurance from your own insurance agent.  The standard policy pays replace-             
          ment costs, minus depreciation based on actual cash value.  Talk to your insurance agent       
          about the different types of insurance available.  Hazard insurance may be impounded.

5.  PMI (Private Mortgage Insurance)
          Depending on the amount of your downpayment, you may be required to have PMI.
          (Generally, anything less than 20% requires PMI).  Because loans with small down pay
          ments involve substantially more risk for the lender, they need protection in case the loan
          goes into foreclosure.  Mortgage insurance helps cover the lender's losses in the event of a       
          foreclosure.
   
          Because this insurance is available, lenders can offer loans with lower down payments.

          PMI requires an up front fee which is payable as a part of your closing costs and it is also
          required to be paid monthly with your payment.  The cost of PMI varies according to the
          amount of your down payment.

          FHA also charges a fee for mortgage insurance and it is called MIP or Mortgage Insurance
          Premium.  There is both an up front fee (which may be financed) and a monthly charge.

          VA charges a funding fee which may also be financed.