One of the first thing that a homebuyer should determine is how much the payment would be of their mortgage loan. If you can determine mortgage payments easily then you will know how much you can afford. We will share something which we had discovered so that you will have an easier time.
Determine Mortgage Payments Easily with PITI
So, what is PITI? PITI is an initial for Principle, Interest, Taxes, and Insurance which are the terms that you need to know because they influence your mortgage payments.
- Principle. This is the amount borrowed, specifically how much of your loan you’re scheduled to pay off each month.
- Interest. It tells you how much it costs to use your loan, and your monthly payment is based on your interest rates.
- Taxes. This refers to the property taxes rolled into your monthly house payment and are sometimes called an escrow or impound account.
- Insurance. Consist of the amount of the mortgage payment that goes toward hazard and fire insurance.
Determine Mortgage Payments Easily with DTI
So you know what PITI is, now let us introduce you to DTI. DTI simply means Debt to Income ratio and this helps you determine how easily you’ll be able to pay off your debts. It is the percentage of your total monthly debt against your monthly income.
(PITI + monthly liabilities) ÷ monthly income = DTI
Make sure your DTI stays at 45% for a quick and easy approval of your home loan. It’s the rate most lenders prefer.
Now – Determine Mortgage Payments Easily
Now that you know both PITI and DTI we can now share with you this very easy way in calculating your mortgage payments. It’s quite simple actually. It is a fact that for every $100,000 that you borrow, you can expect a monthly mortgage payment of $725. This is true in most cases since your principal, interest, property taxes and home insurance will be about $725.
|Amount Borrowed||Approximate PITI|
Of course, don’t forget that your credit score will also help you get a lot faster, thus it is important to keep it in check.
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