Mortgage Payment Categories
Mortgage payments are somewhat complicated to account for because they’re composed of multiple pieces packaged together. This gives you a fixed (unless your mortgage is adjustable) monthly price that does not change, which makes it easier to predict expenses. A typical mortgage includes the following:
- Principal Payment: The portion of the mortgage payment that goes toward reducing the loan balance.
- Interest Payment: The amount paid to the lender as compensation for borrowing the money.
- Property Taxes: Taxes assessed by local authorities on the property’s assessed value, are often collected as part of the mortgage payment and held in an escrow account.
- Homeowners Insurance: The cost of insuring the property against damage or loss.
- Private Mortgage Insurance (PMI): If the down payment is less than 20% of the home’s value, PMI may be required, adding an extra cost.
- Homeowners Association (HOA) Fees: If the property is part of an HOA, these fees cover common area maintenance and amenities.
Not all of the pieces listed above are tax deductible. Mortgage Principal and Homeowners Insurance are not tax deductible. Mortgage interest and Property Taxes, however, are tax deductible.
What if all of my mortgage expenses are in one transaction?
If you pay all of your mortgage expenses in one lump sum and want to break them up, you can do so by splitting the transactions. Below, are step-by-step instructions on how to split one transaction into multiple ones:
- Use the Split Transaction feature (only available to premium members) to break your mortgage payment into each of its component parts.
- Then, categorize the Mortgage Principal as “Mortgage Principal” using the category picker on the “Transactions” page.
- Categorize the Mortgage Interest as “Mortgage Interest” using the category picker on the “Transactions” page.
- Categorize the Private Mortgage Insurance (PMI) as “PMI”
- Categorize the Property Taxes as “Property Taxes”
- Categorize the HOA portion as “HOA Fees”
Note: Some of these categories may not exist, and you’ll need to manually add a custom category to account for these.
Rentastic Mortgage Calculator
Need to calculate a future mortgage? Use Rentastic’s mortgage calculator to compute exactly how much your monthly expenses will be: Rentastic Mortgage Calculator