There are several ways to calculate monthly mortgage PITI payments. PITI stands for Principal, Interest, Taxes (property taxes) and Insurance (home owner’s insurance).
o You could use a long, complex formula like: P = L[c(1 %2B c)n]/[(1 %2B c)n – 1] Does that sound fun to you? Me neither.
o You can use an on-line calculator. They are all different, though. Some are good, some are not. But if you are out house shopping and do not have internet access – not an option.
o You can even use a special, hand-held realtor calculator that will prompt you step by step to enter all the variables like: home price, down payment amount, interest rate, length of the loan, etc., then it will calculate the monthly mortgage PITI payment. However, these calculators are expensive, and unless you are a realtor, you will no longer need it once you find your home or refinance – not a cost-effective option.
You need a quick and easy way to figure your payment in your head, or maybe with the calculator in your cell phone.
Believe it or not, there is a way. It is very straightforward and will give you a ballpark estimate of your PITI payment.
Are you ready for this? It is super simple – just a one step multiplication problem. OK. Here it is. To estimate your monthly mortgage PITI payment multiply the amount of your loan by .008 . That’s it…seriously! (As long as mortgage interest rates don’t change drastically from what is available in Jan 09)
o If you are going to buy a $200,000 house, and you can pay $10,000 down, your loan amount will be about $190,000.
o The math looks like this: $190,000 x .008.
o Plug those numbers into your calculator.
o Your monthly mortgage PITI payment will be about $1520 per month.
Be advised, this figure is only an estimate – a simple way to get an estimate when you are not able to get to a computer. If you are in contact with a realtor or loan officer, they can give you a much more accurate idea of your monthly mortgage PITI payment.