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# How To Estimate Monthly Mortgage Payment

By: Sylvia Tsang

Break Studios Contributing Writer

If you have thought of getting a mortgage, understanding how to estimate the monthly mortgage payment is a winner. In other words, you want to find out what your PITI is. PITI stands for the principal, interest, tax and insurance. A monthly mortgage payment always includes these four components. PITI has been a very popular mortgage term that is being used by all the lenders. All these information might sound complicated, but you will feel better once we give you the steps on estimating your monthly mortgage payment.

To estimate the monthly mortgage payment, you will need:

• Internet
• Paper
• Pen
1. Figure out the monthly principal and the interest amount. The principal is your loan amount. You need to figure out the down payment amount before knowing the loan amount. Depending on the loan program that you are getting into, the down payment amount may vary. Do some research on the internet to see what loan program you can qualify for. The interest rate is the cost for you to borrow the loan charging by the lender. Your interest rate is determined by the mortgage product that you sign up for. You can calculate both amounts by using a mortgage calculator online.
2. Obtain the monthly property tax amount. Visit the county appraisal district based on the location of the house. The annual tax rate can be found on the property appraisal record. In order to figure out the monthly property tax amount, you need to use the appraisal value divided by 100 and then multiply the answer by the annual tax rate.
3. Compute the monthly homeowner's insurance amount. You are required to purchase the homeowner insurance by the lender. In case of any hazards, the lender's collateral, which is your house, will then be fully insured. The lender will collect your insurance payment every month, and they will pay the insurance company afterward. Take the annual insurance amount and divide it by twelve to give you the monthly insurance amount.
4. Calculate the PITI. Now add up these three monthly amounts: principal and interest, tax, and homeowner insurance. This is how you estimate the monthly mortgage payment. Note that the monthly principle and interest amounts will always be calculated together.

You did it, finally! Estimating your monthly mortgage payment should be a piece of cake with these instructions. Finding the right dream home is totally possible once you know the monthly mortgage payment you can afford.

Posted on: Aug. 18, 2010