Through lending financial institutions, an individual can get financing by acquiring a mortgage. By putting an asset they own as collateral, and individual can get finances. The surety becomes the property of the mortgagee if the loan is not repaid. To secure the property, the borrower must required amounts in time.
Calculation of the payments can be processed by the use of a piti calculator. These payments include the principal and interest. 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 ‘term in years ‘describes the number of years over which the mortgage loan is to be repaid. The time for repayment is determined by the lender according to the regulations they set. It is therefore important to clarify this with your lender. The money that stands as the charge for getting the loan is known as the ‘interest rate’
‘Monthly payment(PI)’ is a sum of the amount of principal and interest to be paid per month. 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).
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 money paid in premium for the insurance of the property. For the calculation of PITI, the sum is divided by 12.
‘Total payments’ is the sum of all the monthly payments that shall be made by the end of the ascertained duration of payment. This amount does not include any prepayment of loan principal. 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’The word means the amount of money you will save by engaging in the process of preparing your 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.