Your Monthly Mortgage Payment

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When you own a home, the responsibility goes deeper than just making monthly principal + interest payments to the bank. Real estate taxes and homeowners insurance are due, too.

Principal and interest payments are typically due monthly to your lender; real estate taxes are due to your local taxing authority; and homeowners insurance is due to your insurer.

Depending on how you manage these four parts, you may get a lower rate.

What Is PITI?
When a mortgage lender is trying to determine your ability to repay, one area at which it looks is your total monthly housing payment.

Your total monthly housing is calculated as follows:
•Your monthly mortgage principal payment
•Your monthly mortgage interest payment
•Your annual real estate tax bill, pro-rated to a monthly figure
•Your annual homeowners insurance bill, pro-rated to a monthly figure

Collectively, these elements — principal, interest, taxes, insurance — are known as PITI.
PITI can vary from day-to-day, and from home-to-home. This is because mortgage rates change daily, which change a home’s principal + interest payment, and because every home’s tax bill and insurance bill are different.

Many mortgage programs such as the FHA Streamline Refinance and various VA home loans require monthly pro-rated tax and insurance bills to be included within the monthly mortgage payment, a loan trait known as “escrowing” taxes and insurance.

Find Your Monthly Escrow Payment
Escrows are a part of your mortgage payment and you’ll want to know your obligation. It’s best to use a calculator because, although the math is simple, you want to make sure you get it right.

First, find your home’s real estate tax bill(s), noting that in some areas, you may receive statements from multiple different taxing authorities. Find the sum of these statements and add to it your annual hazard insurance premium.

If you are a home buyer and don’t know what your hazard insurance premium will be, estimate 1% of the purchase price. This will yield an estimate which is likely larger than your actual premium, but when building a budget, it’s often better to estimate on the high-side.
Next, divide your sum by the 12 months in a year.

These monies are paid along with the mortgage payment’s principal + interest portion.

Call your favorite Go To Guys for any questions regarding your payment or escrow! 770.924.1111

What to do with your home during divorce….

Getting out of a marriage is hard and life changing, but getting out of a mortgage (and the marital home) can be even harder. After years of co-signed loans and joint finances, separating yourselves will require a lot of patience.

Rule #1….Keep up with your bills! Seriously.
With everything going on, it’s easy for monthly mortgage payments to fall through the cracks, especially if you don’t plan on staying in the house. But in order to buy again after the divorce, it’s important to keep your credit score good, and missing payments while your name is still on the mortgage isn’t going to help.

Rule #2….Have an agreement in place of who will pay what.
This means more than just paying your mortgage. Any late bills can hurt your credit score. So make sure you have an agreement in place about who pays what.

Rule #3….Have the discussion.
If you and your spouse can have a good discussion about the house, it’s best to decide very early if you will sell or if one of you will stay. You could both stay in the house, at least until it sells and you can split the equity. However, in most cases that is impossible for obvious reasons.

If you jointly decide that one spouse will keep the house the most important factor will be whether or not one of you can afford the house on your own. In order to remove one spouse from the mortgage, you actually need to refinance, or replace your existing loan with a new one.

That means that the spouse keeping the house will need to be able to qualify on his or her own–and then keep up with the payments, with or without alimony.

Call us today with questions about what to do during this difficult time! We are here to help! 770.924.1111