our monthly payment (PITI) is the sum of four items - the principle of the loan (P), the interest on the loan (I), property taxes (T), and homeowner's insurance (I).  To predict your monthly payment for a 30-year fixed rate loan, use the following table to determine the principal and interest portion of the payment.  Simply divide the loan amount by 1,000 and then multiply that figure by the appropriate interest rate factor from the table below.  To that sum add 1/12th of the amount of your yearly taxes and 1/12th the amount of your yearly insurance.

For example - If your mortgage loan amount is $350,000 and the interest rate is 7%, then your monthly "PI" would be:

    $350,000 / 1,000 = 350
    350 X 6.65 = $2,327.50



Then add your monthly insurance premium and your property tax to your principal and interest to get your total monthly payment (This is your PITI).

A Note on Taxes
All property owners must pay general real estate taxes.  These taxes are also called "ad valorem" taxes because the amount of the taxes varies, according to the value of your property.  These taxes go toward the operations of various governmental agencies and municipalities.  Each agency or municipality determines how much money is needed for the budget.  They receive these funds through mills levied against properties in their counties, which the state limits as to how much it can increase each year without the need for voter approval.  Each mill is equal to one-thousandth of one dollar ($0.001) of assessed value.  A more simple way of looking at this is one mill is $1 for every $1,000 of assessed value.  The actual tax is calculated by multiplying assessed value by the current mill levy.  General taxes are a lien against your home as of January 1st, the year of the tax, even though they are not due until the following year.  The assessment of your property is done by the county assessor.  The land and buildings are usually assessed seperately.  This assessed value is usually 12 - 15% of the true value (the percentage is determined by state law).  If an owner feels the assessed value of their property is incorrect, they can present their objection through the local taxing authority on an annual basis.

Back to Top
Back to Financing Info