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 institution giving the loan will acquire the property if the loan defaults. 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. The payments comprise the principal and estimate. This article explains some of the key terms to understand before using the Piti calculator.
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 differs with different mortgagees. Confirming this with the institution you wish to borrow from is important. The money that stands as the charge for getting the loan is known as the ‘interest rate’
The total of the principal and interest charge is termed as the ‘monthly payment’ After ascertaining the duration of payment and the interest rate, these amounts are decided. ‘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’ In calculation of PITI, the annual property taxes are distributed in monthly amounts. 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.
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. The ‘total interest ‘ is an addition of the interest amounts paid over the full term of the payment of the mortgage loan.
The tail of the terms is the word ‘Savings’The word means the amount of money you will save by engaging in the process of preparing your loan.
Using a PITI calculator to get the amounts that you will be paying would go a long way to prepare for the whole process of acquiring the loan. 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.