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Key Terms to Note When Calculating Your Mortgage Payments Using a Piti Calculator
Through lending financial institutions, an individual can get financing by acquiring a mortgage. A structure owned by the person asking for a mortgage can be used as a warranty for repayment of finances given. 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. These payments include the principal and interest. 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 ‘term in years ‘describes the number of years over which the mortgage loan is to be repaid. 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 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’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’ In calculation of PITI, the annual property taxes are distributed in monthly amounts. 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.
When the amounts given to the mortgagee per month are added, they round up to give the ‘total payments’ In its calculation, any amounts which are paid earlier as principal are excluded to give the right figure when using the PITI calculator. 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.