There are several ways to calculate PITI monthly mortgage payments. PITI stands for principal, interest, taxes (property taxes), and insurance (homeowner’s insurance).
o You can use a long and complex formula like: P = L[c(1 %2B c)n]/[(1 %2B c)n – 1] Sound fun to you? Me neither.
o You can use an online calculator. However, they are all different. Some are good, some are not. But if you’re out and about shopping and don’t have internet access, it’s not an option.
o You can even use a special handheld real estate calculator that will guide you step by step to enter all the variables like: house price, down payment amount, interest rate, loan duration, etc. then it will calculate the payment monthly PITI mortgage. However, these calculators are expensive, and unless you are a real estate agent, you will no longer need them once you find your home or refinance, which is not a profitable option.
You need a quick and easy way to calculate the payment in your head, or perhaps with the calculator on your cell phone.
Believe it or not, there is a way. It is very simple and will give you a rough estimate of your PITI payment.
Are you ready for this? It’s super simple – just a one-step multiplication problem. OK. Here it is. To estimate your monthly PITI payment on your mortgage, multiply your loan amount by .008. It is for real! (As long as mortgage interest rates do not change dramatically from what is available in January 2009)
o If you are buying a $ 200,000 home and can afford $ 10,000, your loan amount will be approximately $ 190,000.
o The math looks like this: $ 190,000 x .008.
o Enter those numbers into your calculator.
o Your monthly PITI mortgage payment will be approximately $ 1,520 per month.
Please note that this figure is only an estimate – an easy way to get an estimate when you can’t access a computer. If you are in contact with a real estate agent or loan officer, they can give you a much more accurate idea of your monthly PITI mortgage payment.