One of the ways which property owners can access funds from lenders, for example, banks, is through getting a mortgage loan. By putting an asset they own as collateral, and individual can get finances. The property which is mortgaged is usually set to be acquired by the lender if the borrower defaults in payment of the mortgage loan. For the property to remain as a possession of the individual who is borrowing, they will have to make the correct payments as per agreement.
A piti calculator can be used to calculate the estimated mortgage payments that you would pay for the loan. Principal and interest are the main amounts that are to be paid. Below you will find key words to get before attempting to use a piti calculator.
‘Mortgage amount’ is the total amount of the loan. ‘Term in years’ refers to the duration over which the loan is to repaid. The time for repayment differs with different mortgagees. Confirming this with the institution you wish to borrow from is important. The ‘interest rate’ is the rate of return per year expected to be charged on the loan amount.
The sum of the loan acquiring charge and the monthly percentage of the borrowed amount is called the ‘monthly payment’. These amounts are determined depending on the duration of loan payment and the interest rate. ‘Monthly payment'(PITI) is a term used to explain the total of monthly payment(PI), homeowners insurance and property taxes (calculated per month).
The amount paid in taxes for the property is referred to as the ‘annual property taxes’ This amount is usually divided by 12 to give the property taxes to be used in the calculation of PITI. The ‘annual home insurance ‘ is the amount of money expected to be paid as homeowners 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.
When the amounts given to the mortgagee per month are added, they round up to give the ‘total payments’ If the money that was prepaid as principal of the loan is added to the calculation, the figure obtained would be incorrect. The ‘total interest ‘ is simply defined as the original amount of interest paid in the long run calculated as a percentage from the loan amount or principal.
To conclude the slope is the word ‘Savings’ Its definition is the amount you will be spared from paying if you make the required preparations before going for the loan.
As outlined above, the PITI calculator can be very helpful in preparing the borrower psychologically before going ahead to apply for the mortgage. Possession of the asset that you are putting on the lender will be assured because you will have adequately prepared. Use of the Piti calculator will make you ready for the mortgage repayment period, and you would be wise to educate yourself on how to use it and calculate the payments for your next mortgage loan.