Finance
A budget mortgage in Nebraska is a type of conventional mortgage that includes in the monthly payment:
APrincipal and interest only
BPrincipal, interest, property taxes, and insurance (PITI)✓ Correct
CPrincipal, interest, and HOA dues
DOnly principal — interest is separate
Explanation
A budget (or standard) mortgage payment includes PITI — principal, interest, property taxes (escrowed), and insurance (homeowner's and, if required, PMI). The lender manages tax and insurance payments through an escrow account.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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