Predicting Your Monthly PaymentYour monthly payment (PITI) is the sum of four items – the principle on 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 part 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 $150,000 and the interest rate is 12%, your monthly “PI” would be:
$150,000 divinded by 1,000 = 150.
150 x 10.29 = $1,542.50
Then add your monthly insurance premium (approximately $25-$75) and your property tax to your principal and interest and this is your monthly payment.
Hazard Insurance covering your home for its contract value is required by your mortgage lender. You are at liberty to choose any insurance company and agent you wish. Ask your agent to quote you a policy for insurance coverage.
All property owners must pay general real estate taxes. These taxes are also called “ad valorem” taxes because the amount of the taxes varies, according to the value of your property. General real estate is levied for the operations of various governmental agencies and municipalities. Other taxing bodies may include school districts, drainage, water, sanitary, and recreation districts.
Each agency or municipality determines how much money is needed for the budget. They receive these funds through mills levied against properties in their counties. The state limits how much the mill levy can increase each year without voter approval. Each mill is equal to one-thousandth of one dollar ($.001) of assessed value or $1 for every $1,000 of assessed value.
The actual tax is calculated by multiplying the 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.