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 surety becomes the property of the mortgagee if the loan is not repaid. 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.
Calculation of the payments can be processed by the use of a piti calculator. These payments include the principal and interest. Below you will find key words to get before attempting to use a piti calculator.
The ‘mortgage amount’ is a term that indicates the original balance of the mortgage loan. ‘Term in years’ refers to the duration over which the loan is to repaid. Different lenders offer different durations for paying the same amount of loan. 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’
The sum of the loan acquiring charge and the monthly percentage of the borrowed amount is called the ‘monthly payment’. The time given for paying the loan is used to calculate the ‘monthly payment’ The ‘monthly payment'(PITI) comprises the PI in addition to the homeowner’s insurance and the property taxes to be paid per month.
Taxes paid for the property to be mortgaged are cited as ‘annual property taxes’. When divided by 12, the amount gives the figure to be used to get the PITI. The insurance charge paid for the property in question is referred to as the ‘annual home insurance ‘ For the calculation of PITI, the sum is divided by 12.
The addition of the monthly charges which are paid to the lender gives 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. When the loan charges paid per month are summed up, they give the ‘total interest ‘
Last in the list is the ‘Savings’The word means the amount of money you will save by engaging in the process of preparing your loan.
The PITI calculator if used by the borrower will be of great benefit in terms of making the individual borrowing ready. 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.