TIP is calculated on a fixed rated mortgage as follows:
(Monthly P+I) X loan term (ex. 360 months) minus the loan amount = interest paid during the life of the loan
TIP = (interest paid during the life of the loan + pre-paid interest) / loan amount
TIP shows how much interest you will pay over the life of the loan in relation to the size of the mortgage. TIP is a bit complicated so I hope my explanation clarifies things for first-time homebuyers in Virginia Beach, Norfolk and Chesapeake.