What is PITI?
The total monthly housing expense is known as PITI (Principle, Interest, Taxes and Insurance). The monthly housing expense for a borrower includes the payment for the principle balance of the loan, the interest payment of the loan, the real estate taxes, and the homeowner’s insurance for the property. Homeowner’s association dues are typically included in the calculation of PITI.
PITI stands for principal, interest, taxes, and insurance. It is basically your monthly payment. Principal is the actual amount of your loan. If you borrowed $200,000, the principal is $200,000. Every time you make a monthly payment you’re paying a part of the principal and reducing the amount you owe on the home and increasing the part that you own (your equity.) Interest is the amount that the lender charges you for borrowing the money (a percentage of the principal). Interest can change your monthly payments when interest rates change if you have an adjustable rate mortgage. Property taxes are made on real estate generally at county level and used to fund schools, road work, police and municipal services. Property taxes vary by county and are part of the equation that determines your mortgage payment. Homeowner’s insurance may be collected by your lender and paid to your insurer.
PITI, or Principal, Interest, Taxes (property taxes), and Insurance, is basically the cost of living in your particular home. PITI can also be expanded to include any private mortgage insurance and homeowners association fees or condo association fees. Q: What is Lender Paid Mortgage Insurance (LPMI) A: Lender paid mortgage insurance is a program in which the lender will pay the mortgage insurance in exchange for a slightly higher rate.
