HOUSEKEEPING
A realistic mortgage calculator
For consumers using most online mortgage calculators to see what they might owe on a new deal, the problem with the numbers comes out in the form of property tax and hazard insurance, which usually don’t get factored in but can add a hefty chunk to the monthly payment.
That’s why the “Advanced Mortgage Calculator” at can be a big help. The calculator allows the user to factor in the costs of first and second mortgages, plus taxes and hazard insurance, resulting in a more realistic idea of the bottom-line cost. The site also features a more traditional, simple mortgage calculator, as well as an interest-only loan calculator that shows the size of payments a consumer would make – excluding taxes and insurance – by converting to an interest-only deal.
SHORT COURSE
PITI adds up to monthly payment
This is an acronym for the way a mortgage lender tells a borrower how much a house will cost on a monthly basis. The monthly payment is PITI, representing principal, interest, taxes and insurance. These four elements are the primary components of monthly mortgage payments.
Many mortgage lenders – in an effort to ensure that property taxes and homeowner’s insurance premiums are paid on time – require borrowers to include these items in their monthly payments. Funds designated for insurance and taxes are then placed in an escrow account until they are needed.
