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. 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 ‘interest rate’ is the rate of return per year expected to be charged on the loan amount.
‘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’ 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 ‘When divided by 12, the amount gives the monthly charge used in the calculation of PITI. The figure is divided by 12 to give the monthly insurance charge.
The addition of the monthly charges which are paid to the lender gives 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. 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.
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. Possession of the asset that you are putting on the lender will be assured because you will have adequately prepared. It is recommended to use the Piti calculator to ensure your payments are at the right time and to keep you aware of amounts that are to be paid.