The Homebuyers Guide: Part Five: Mortgage Basics 2:Taxes and Insurance


What would the United States of America be without its taxes?   The same thing goes for your home mortgage. Not only does it require its property taxes, it needs insurance as well.

The total monthly payments are often referred to as the PITI. These initials stand for principal, interest, taxes, and insurance.

Property taxes: Our Arizona property taxes go towards schools, libraries, emergency services, and other governmental services. There is no way around them.

Each monthly mortgage payment may include a prorated portion of the annual property taxes that you owe.

For example, if your annual taxes are $2,200, each of your monthly payments may include $200 of property tax, in addition to the principal and interest. Sometimes, you may pay your property tax payments directly without having them included in your mortgage payment.

Insurance: It has become almost a standard requirement for the homeowner to purchase homeowner’s insurance. This insurance may cover both the home and its contents in the event of a flood, fire, or other damage. Usually you, as the homeowner, should purchase insurance from a separate insurance firm.

Additionally, if you can’t afford a down payment of at least 20% of the purchase price, you will probably have to buy private mortgage insurance (PMI). This insurance protects the lender if the buyer defaults on the mortgage. PMI may add $50-100 or possibly more to the monthly mortgage bill. has a monthly mortgage calculator to help with giving you an idea of what you may have to pay.

Always consult your lender or financial consultant regarding any mortgage related questions.

For any other questions, you can contact us at or 602.687.9933 .


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