or more expenses (at least interest; maybe insurance, fees, and others
depending on the terms of the loan) and principal payment that reduces the
loan amount. Property owners also need to distinguish between maintenance
and improvements: The latter increase the value of the property, the former
are an expense.
Mortgage payments usually just principle, interest, and escrow (payments
into an asset account being held for you by the mortgage company from
which taxes, insurance, etc. are paid. You possibly will not know the
dates and amounts of those transactions (for example debit RE Tax,
credit escrow) until you get your annual escrow review statement. At
least it was that way in the old days of pen and ink on paper.
Wrong to consider what is going into escrow a current expense. The
amount they calculate you must pay into escrow each month is enough to
keep the balance in that account positive at all times throughout the
year << as various amounts go out for RE tax, insurance, etc. >> In
other words, the amount you must pay into escrow will usually change
annually based on the current balance in the account, and the dates and
amounts payments from the account will be made. NOT simply add up annual
taxes, insurance, etc. and divided by twelve!
Michael D Novack
PS -- This may be dependent on jurisdiction, but so far those were the
rules in the states in which I have lived/had a mortgage.
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