One of the ways which property owners can access funds from lenders, for example, banks, is through getting a mortgage loan. A structure owned by the person asking for a mortgage can be used as a warranty for repayment of finances given. The surety becomes the property of the mortgagee if the loan is not repaid. That said, it is therefore of very great importance that the borrower honors their obligation towards the loan to avoid losing their property.
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. This article explains some of the key terms to understand before using the Piti calculator.
The ‘mortgage amount’ is a term that indicates the original balance of the mortgage loan. The period through which the borrowed amount is to be paid is called the ‘term in years’ Different lenders offer different durations for paying the same amount of loan. It is therefore important to clarify this with your lender. The percentage of the loan expected to be added on top of principal is referred to as the ‘interest rate’.
The total of the principal and interest charge is termed as the ‘monthly payment’ The time given for paying the loan is used to calculate the ‘monthly payment’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 ‘annual home insurance ‘ is the money paid in premium for the insurance of the property. For the calculation of PITI, the sum is divided by 12.
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.
Last in the list is the ‘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. 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. 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.