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What is PITI?

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What is PITI?

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(back to top) PITI is the acronym referring to the below-referenced components of your monthly mortgage payments.

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It stands for “Principal, Interest, Taxes and Insurance” that comprise your total monthly mortgage payment. With larger down payments you may be allowed to pay only the PI, principal & interest monthly and pay your own tax and insurance.

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PITI means principal, interest, taxes and insurance. These are the components that are paid monthly to your lender. Taxes and insurance can be paid by you directly; however, there is often an upfront cost to do so. The principal and interest can also be paid bi-weekly which will reduce the length of time that it will take to payoff your mortgage. In most cases you can prepay principal without penalty which will also reduce the length of time to payoff your mortgage.

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Principal, Interest, Taxes, and Insurance – PITI PITI is the acronym referring to the above-referenced components of your monthly mortgage payments. That is, each month your payment to your lender will consist of: • Funds to be applied to the Principal – to repay the actual money you borrowed. • Funds to be applied to the Interest – to repay the interest you’re being charged on the loan, over the life of the loan. • Funds being collected in an Impound/Escrow Account to pay your property taxes when they come due. • Funds being collected in an Impound/Escrow Account to pay your hazard/fire Insurance when it comes due.

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PITI is a term commonly used in the mortgage industry that stands for principal, interest, taxes, and insurance. These are the components that make up your monthly mortgage payment to the lender. PITI is part of the financial analysis to determine your ability to repay the mortgage along with your income and other expenses.

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