PITI Mortgage Calculator User Guide
[I:http://www.seo-coaching.net/wp-content/uploads/2011/03/KellyTurner21.jpg]PITI Mortgage Calculator usage doesn’t just save time, but is practically essential for a homebuyer. The abbreviation stands for principal/interest/tax/insurance (property tax & homeowners insurance). It can be used for calculating the amortization schedule for either a Federal Housing Administration loan or a conventional fixed rate loan.
Homebuyers using the tool need to feed in the term, interest rate & loan amount. It also requires annual/monthly figures regarding the property’s homebuyer insurance payment and the property tax involved. With these figures as the input, the tool can provide detailed annual/monthly amortization schedules.
Had it not been for the use of this tool, getting the amortization schedule would involve a lot of math where the ‘Factor’ for the proposal is involved. Factors are a method for finding the amount the homebuyer would need to pay per $1000 in loan amount. The Factor will vary depending on the interest rate and term period.
As an illustrative example, consider what happens when there isn’t a mortgage calculator with PITI available. Assume that a homebuyer is looking at a $250,000 loan with a 5% interest rate for either a 15 or 30 year period. The homebuyer have to consult factor charts to find out that the factor here for 15 and 30 yr loans are 7.91 and 5.37 respectively.
So for the 15 year term, the proposal involves a payment of $1977.50 (250 times 7.91) for every $1000 in the $250k loan amount. For a 30 year term, it would be $1342.50 (250 times 5.37). Assuming that no body really wants to go around doing these calculations, it’s a whole lot easier to just use a home loan calculator with taxes and insurance data fed into it along with the proposal’s basic details.
One other thing to note is that this tool works for FHA loans too, so homebuyers are advised to do a comparison of FHA vs conventional proposals. The point here is that FHA provides insurance so the lender carries less risk and offers better terms. Homebuyers without good enough credit can qualify for proposals that they couldn’t normally get without the FHA’s backing.