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Important Words to Understand Before Using a Piti Calculator to Get Your Mortgage Payments

An individual can get money for a project through approaching lenders for mortgages. A structure owned by the person asking for a mortgage can be used as a warranty for repayment of finances given. The property which is mortgaged is usually set to be acquired by the lender if the borrower defaults in payment of the mortgage loan. 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.

The piti calculator is an easy way of ensuring that you have all your payment amounts right. The payments comprise the principal and estimate. This article explains some of the key terms to understand before using the Piti calculator.

‘Mortgage amount’ is the total amount of the loan. The period through which the borrowed amount is to be paid is called the ‘term in years’ The time for repayment is determined by the lender according to the regulations they set. 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 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’ ‘Monthly payment'(PITI) is a term used to explain the total of monthly payment(PI), homeowners insurance and property taxes (calculated per month).

‘Annual property taxes’ is the amount the borrower is expected to pay as taxes for the property. 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 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’ 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.

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. 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.

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