1.) Complete the first six fields to display the monthly principal & interest payment.
2.) Complete the entire form to get the full P.I.T.I. which lender's use.
IMPORTANT: Down payments less than 20 percent may require PMI unless a piggyback second mortgage is obtained or the loan is a VA or non-QM loan.
Based on your inputs, here are some choices that we recommend:
Good for: borrowers who want low rates and fees and an online experience with phone support. VA loans are an emphasis
Good for: FHA borrowers and others with limited down payment funds. Fast, convenient and less or equal fees as Rocket retail.
Good for: borrowers who are either self-employed, retired, or need alternative income verification, no income, no job, no tax returns.
When you make a large purchase like buying a home it's a good idea to know what makes up your monthly payment. Your monthly payment covers the principal loan balance and interest charges from the lender for the majority of conventional mortgages. Lenders are conservative and risk averse so they also factor in property taxes, homeowner's insurance, and if applicable HOA dues in your payment to guarantee these obligations can met from your income.
We use a standard formula to calculate payments. It factors in the loan amount, interest rate, and length of the loan in months. While the math is complex, the goal is simple - to give you a clear payment estimate encompassing all mortgage-related costs. Understanding these components gives you greater control in assessing affordability.
Principal - This is the loan amount you actually borrow for the home purchase.
Interest - The charge from the lender for borrowing the principal. Depends on your loan type and credit.
Taxes - The property taxes levied on the home; paid via your monthly payment to escrow.
Insurance - The homeowners insurance premiums; also paid to an escrow account within your payment.
P.I.T.I.A includes all the above plus:
Association Fees - If the property you want to purchase or already own is part of a homeowners association (HOA) you will have to make the mandatory monthly or quarterly payments.
It's important to you know what each component represents. Principal and interest make up the core housing payments connected to your loan and its terms. Taxes, insurance and other fees like HOA dues are incorporated into the monthly debt obligation.
Property taxes and insurance are sometimes required by the lender to be paid into an escrow account. This protects the lender while making homeownership more convenient for you. Understanding what comprises P.I.T.I. and P.I.T.I.A. allows you to accurately estimate costs.
Okay, you caught that. Good catch. Some loans don’t require PMI with less than 20-percent down, namely non-QM loans. PMI stands for private mortgage insurance which lenders require on conventional QM and FHA loans as additional security in case of a mortgage default.