Calculate Monthly Mortgage Payment

When lenders reviews mortgage application from borrowers, they calculate P.I.T.I.A to qualify the housing expense to borrower's total income. The phrase P.I.T.I.A. represents Principle, Interest, Tax, Insurance, Association fee. Lenders qualify borrowers using monthly housing expense with the sum of P.I.T.I.A to borrower's income to determine the loan amount that the borrower can qualify for.

Mortgage itself is a secured debt that it uses the property as collateral. When home buyer, a.k.a. the borrower applies for a home loan with the lender, the lender will ask borrower to provide required document to prove his/her income. The standard is to have borrower provide 2 months paystubs, 2 months bank statements, 2 years tax return and 2 years w2. The income to P.I.T.I.A ratio must meet lender's criteria of Debt-to-Income ratio DTI as it is called. Different types of loans have different Deb-to-Income ratio. I will explain types of loan programs in another post next time.

When calculating P.I.T.I.A, do remember to add Association fee. Because traditional single-family residences are typically built without homeowner association. But in nowadays, most new communities are governed and managed by association, who also maintains common area of the community, for instance, park, pools, kids' playground etc. Sometime high-rise condominium community will have very high association fees, especially for metro cities like Los Angeles and New York, sometime HOA fee can go as high as couple of thousand dollars!

Even though the cost of owning a home is not cheap in current market, especially the interest rate is at a persistent high level in the 6% range, homeownership is the best way for people to build up equity and is a very good asset to hold onto for long time. Though the housing market has gone through tremendous changes in the past few years, homeownership is still the dream for anyone who wishes to own his own place to call Home!