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A mortgage payment usually has three parts: the amount that goes toward the principal (or balance), an amount that goes toward the interest you will be paying (the cost of borrowing the money), and an amount that is paid into a separate account called an escrow account.

This money is set aside to automatically pay for required elements of the loan package such as homeowners insurance, property taxes, and mortgage insurance, also called MIP (usually required when the loan balance is 80% or more of the property’s most recent appraised value).

Other items that can affect this part of the payment include homeowners and/or association fees when applicable.
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