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 institution giving the loan will acquire the property if the loan defaults. That said, it is therefore of very great importance that the borrower honors their obligation towards the loan to avoid losing their property.
Calculation of the payments can be processed by the use of a piti calculator. Principal and interest are the main amounts that are to be paid. The information given here breaks down the terms used in a piti calculator for easy understanding.
The sum of the mortgage is referred to as the ‘mortgage amount’ The ‘term in years ‘describes the number of years over which the mortgage loan is to be repaid. 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’
‘Monthly payment(PI)’ is a sum of the amount of principal and interest to be paid per month. After ascertaining the duration of payment and the interest rate, these amounts are decided.An addition of the PI, homeowners insurance and property taxes gives the ‘monthly payment'(PITI).
Taxes paid for the property to be mortgaged are cited as ‘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. 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. When the loan charges paid per month are summed up, they give the ‘total interest ‘
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. It will go a long way to ensure your property is secured against being acquired because of loan repayment defaults. 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.