PITI Mortgage Calculator, Enhanced
A PITI calculator is a mortgage calculator that shows the true cost of owning real estate. It has all of the normal stuff like principal, interest, taxes and insurance. But we enhanced it. We added things like PMI, HOA fees, maintenance, rental income, monthly payment, piti payment and appreciation rate.
What is a Mortgage
A mortgage loan is simply a collateralized loan to buy a home. It’s made up of a principal and interest just like any other loan, but has a few unique features, including PMI. These are calculated based on the loan amount, and then amortized over the mortgage term. Usually in the United States, this means 30 years. However 15 year mortgages are also available.
Principal is the amount you owe. It’s the balance you need to pay back in order to own your home free and clear. On our tool, when you see the term “principal paid”, it refers to the the amount you have paid toward your balance.
Interest is calculated at the end of every month, based on the total principal left. This means that there is chance that you can actually lower the interest you have to pay to the bank by paying more toward the principal. Unfortunately, you can’t see what that looks like in this calculator. But you can check out our mortgage payoff calculator to see how it works.
Another way to save on your interest rate is by comparing different lenders. Banks often compete over who offers the best rates. If you want to compare the top lenders in the country, click here and see what they offer.
Keep in mind that your interest rate is generally calculated by your credit, income and credit to income ratio. So make sure you have your credit cards paid off, and your credit history clean before you apply. Or as paid off and clean as you can make them without sacrificing too much on your down payment.
Terms are the rules by which you agree to pay the entire mortgage amount.A loan can be offered in various terms. In the US, the most popular form is a 30-year fixed rate mortgage, however many buyers also opt for a 15-year mortgage, in which a buyer makes slightly higher payments, but quickly removes the debt from their life. In other countries, like Canada, popular terms can come in as low as 5 and 10 years. Once the term and amount is set, the lender is able to set up your payment Schedule.
Adjustable Rate Mortgage
All of these terms are offered as a fixed or adjustable rates. An adjustable rate mortgage is one in which you start of with an initial interest rate and then the bank adjusts the rate over time according to the market. Usually banks offer lower initial interest rates because the home buyer assumes the risk of the market interest rate changing over the term of the mortgage.
Private Mortgage Insurance PMI
This is where our tool starts to shine. Private Mortgage insurance, or PMI for short, is an insurance that the bank takes to protect itself if you end up defaulting. While the bank takes it out, they pass the fee onto you, the borrower. There are two ways you can be forced to pay PMI:
If you put less than 20% down, the bank will usually charge you PMI until you have 20% equity in your house. Our tool automatically turns PMI off in this case, so you can see how it effects your total costs.
An FHA loan is one backed by Federal Housing Association. It usually qualifies for lower interest rates, but the downside is that you have to pay PMI through the entire term. As you can see in the interactive visualization, this can become costly.
There are only two certainties in life, death and taxes. And for many Americans, property tax is included in that. Property tax is charged at the municipal level, so rates vary greatly. If you’re interested in seeing how property taxes look in your area, check out our property tax tool.
Home Insurance isn’t required. But it is highly recommend. It covers catastrophic events like burglary, and damages from storms or vandalism. It’s not very costly, but you should definitely be aware of it when buying a home. You can contact your insurance company for details.
Home Owners Association Fees
Or HOA fees, are fees you have to pay to live in a particular community. They vary greatly in price, and you should look to see if you’re being charged HOA fees before you buy a condo, townhouse or home in a gated community. They can greatly effect the resale value of a home.
We use all of the above expenses to understand your total monthly payment. This is your monthly mortgage payment, summed together with all the other expenses listed so far. We then show you what that monthly payment looks like along your payment schedule.Generally speaking, this amount should be no more than 30% of your gross monthly income.
Cost of Maintenance
THIS IS IMPORTANT. Which is why we added it to the standard calculator. When you own a home, you will be responsible for all of the costs of maintenance. Roof leaks, mowing the lawn, getting a new washer. Everything. We use a industry standard estimate, that maintenance should cost about 1% of the value of your home annually. But this should change depending on certain factors like the age of your home.
It’s not enough to know how much a home might cost you. You should also know how much it will make you. And one of the most tried ways to make money off a home purchase is by renting out a bed, room or an entire apartment.
Home Appreciation Rate
This is by far, the #1 most popular way people plan on making money on their real estate purchase. People by a home on the expectation that it will rise in value. And often, they are right. But by how much. We used the 40 year national average rate, just over 5% a year, which beats out inflation. However, this is not the end all be all. Average annual appreciation can change year to year, and location to location. If you want to see how home values are currently increasing in your area, you can click here.
This is what bring our system from good to great. We bring you from the initial loan amount through every revenue stream and tell you point blank, how much you stand to lose, or gain from buying a house. Simply, in one number and over time.
We aren’t done yet!
Buying a home can be a tough decision. And our job is to keep you informed to help you make it the best decision you can make. So we compiled some maps using our interactive tools to help you make the best decision possible!
5 Maps to Help You Buy Your New Home
1) How Much of Your Income Goes to Your Monthly Payment in Every State
This is calculated by taking the median income in every state, and calculating the mortgage using the median home price.
2) How Much of your Income Goes to Your Mortgage In (Most) Counties in The United States
This is similar to the map above, but with MUCH more detail. In fact, it’s so much detail that it’s difficult to really capture in a still image. Which is why we made in interactive. Click here to get the full experience.
3) Property Tax Rate For Every State in The Continental U.S.
4) Effective Property Tax Rate For (Almost) Every County In the Country
This is another chart that packs immensely more data than the state level map above. And because of that, it’s also better seen it it’s full interactive view here. You’ll be able to zoom down into your local area and see how it compares to neighboring counties.
5) Estimating the Best Counties for You To Live In
OK, admittedly, this one doesn’t work at all as a static map. It takes in your own household income then creates a new map, and processes a couple calculations for you to figure out the best county to live for every county we had data on. It’s extremely useful, but unfortunately Medium won’t let me embed interactive visualizations, so you’ll have to visit our home buying guide in order to get the full experience. In any case, here is a preview: