A mortgage payment is a monthly disbursement of funds paid by the borrower of a loan to the loan lender, according to BusinessDictionary.com. A monthly mortgage payment may or may not include additional funds for real estate taxes or insurance.
All mortgage loans in the United States contain at least two parts: a portion to pay the original principal balance of the loan and a portion that pays interest on the loan. Because all banks require homeowners with mortgage loans to carry hazard insurance, borrowers may set up escrow accounts through which portions of their monthly payments cover the cost of insurance, explains Home Loan Learning Center.
Homeowners can set up escrow accounts for real estate taxes that portions of their monthly mortgage payments go into to cover quarterly, semi-annual or annual property taxes, notes Home Loan Learning Center. Although there is no law that requires borrowers to establish escrow accounts, lenders may require borrowers to set up the accounts if they cannot prove they maintain the funds to pay taxes and insurance on their own, reports the U.S. Department of Housing and Urban Development. HUD enforces the Real Estate Settlement Procedures Act, which only limits the amount of money lenders charge each month to maintain an escrow account.