In a recent article from Inman news, there was a simple infographics presented to explain the mortgage payment made by homeowners. Many home buyers don’t know the truth until they get closer to buying the house and signing the documents. It is better to take a hard look about PITI breakup now before you buy the house than later. I will explain why later down the post.

Here is that infographics which I modified and edited to give a good look.



Principal, interest, taxes and insurance — stack up in blocks of color to comprise the total payment a borrower is required to make, and the graphic also provides a sample set of numbers for each element pegged to a $269,000 mortgage with a 20 percent down payment.

On the other hand, the 4.54 percent interest rate upon which the graphic is based is quite close to today’s prevailing 4.33 percent rate on a 30-year fixed-rate loan.

The graphic includes one additional module, providing a reality check for today’s homebuyers and refiers who are low on cash or simply want to keep some in their pockets.

Down payments less than 20 percent flick on the PMI switch, meaning that lenders charge an extra, substantial monthly fee for private mortgage insurance. The purpose, To both (a) incent borrowers to put more down, and (b) cover the cost of insurance against the additional risk of default that low-down loans present.

Understanding PITI
It is very important to see whether you would be approved for a loan of the required purchase amount to make a decision to buy now or later. PITI plays a major role in finding that out. Front End ratio which is one type of Debt-to-Income ratio (DTI) is used to find whether a person would be approved by lender or not. Frond-end ratio takes expected PITI amount for the month against the monthly gross income (PITI/Monthly Gross Income) to come up with percentage ratio. This ratio has to be below .28 to get approved for conventional loan. Meaning, your PITI should be less than 28% of your monthly income to get a loan. Also knowing how much down payment is expected of certain down payment helps you to plan save for it and avoid the PMI.

Being a CFP Candidate and Realtor, I strongly recommend my clients to check these figure out to get an understanding of you future mortgage payment and make the right decision to buy or wait it out. Is your realtor smart enough to educate you about this financial obligations in buying a home?

About Vijaianand Thirnageswaram

I am a Proud Realtor of Texas, trying to guide and help clients to find their dream home and educate them to buy them for right price. I am also a Candidate for CFP who has more financial knowledge which allows me share and educate clients in any financial decision making process.

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