Through lending financial institutions, an individual can get financing by acquiring a mortgage. A mortgage is a financial instrument which allows a borrower to access funding from a lender by putting a property they own as collateral. The property which is mortgaged is usually set to be acquired by the lender if the borrower defaults in payment of the mortgage loan. To secure the property, the borrower must required amounts in time.
A piti calculator can be used to calculate the estimated mortgage payments that you would pay for the loan. The payments comprise the principal and estimate. The information given here breaks down the terms used in a piti calculator for easy understanding.
The sum of the mortgage is referred to as the ‘mortgage amount’ The period through which the borrowed amount is to be paid is called the ‘term in years’ The time for repayment is determined by the lender according to the regulations they set. Confirming this with the institution you wish to borrow from is important. The percentage of the loan expected to be added on top of principal is referred to as the ‘interest rate’.
‘Monthly payment(PI)’ is a sum of the amount of principal and interest to be paid per month. After ascertaining the duration of payment and the interest rate, these amounts are decided.An addition of the PI, homeowners insurance and property taxes gives the ‘monthly payment'(PITI).
‘Annual property taxes’ is the amount the borrower is expected to pay as taxes for the property. This amount is usually divided by 12 to give the property taxes to be used in the calculation of PITI. The insurance charge paid for the property in question is referred to as the ‘annual home insurance ‘When divided by 12, the amount gives the monthly charge used in the calculation of PITI. The figure is divided by 12 to give the monthly insurance charge.
‘Total payments’ is the sum of all the monthly payments that shall be made by the end of the ascertained duration of payment. In its calculation, any amounts which are paid earlier as principal are excluded to give the right figure when using the PITI calculator. When the loan charges paid per month are summed up, they give the ‘total interest ‘
To conclude the slope is the word ‘Savings’ The money that you would exempt yourself from paying if you made adequate preparations would be your saving.
As outlined above, the PITI calculator can be very helpful in preparing the borrower psychologically before going ahead to apply for the mortgage. A huge benefit that will be acquired from using this calculator is that the property you are to set under mortgage will be protected from auctioning by the lender or financial institution. To conclude, the use of a PITI calculator to get your mortgage payments is highly advised as a measure of preparation and to keep you on track with your payments.