In each case, prepayment means payment occurs before the loan has been fully amortized. Changes in the prime rate influence changes in other rates, including mortgage interest rates. The part of the monthly payment that reduces the remaining balance of a mortgage. The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage.
Interest is the fee charged for borrowing money.
Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance. The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself. Also known as a government mortgage.