Definition of "PITI"
You open your mortgage documents and you see this big amount of money owed under “PITI”. But you have no clue as to what is the right PITI definition. Don’t worry; we got you!
PITI is not someone with an accent trying to say “pitty”. The correct PITI definition is of an acronym to the primary elements of many monthly mortgage payments:
- P for Principal
- I for Interest
- T for Taxes
- I for Insurance
So, Principal, Interest, Taxes, and Insurance - or PITI – are actually the main components of what you will pay back to the lender monthly once you get a mortgage. However, not all mortgages include taxes and insurance in the payments. That doesn’t mean they will charge you a “PI”; they’ll probably just single out principal and interest.
But saying that PITI is just an aggregation to make the understanding of borrower’s expenses is not the most thorough PITI definition. The PITI assembling is as important for the lender itself, so it can determine the affordability of an individual mortgage and approve it or decline it. The lender calculates one’s PITI to determine the borrower’s risk, just like the borrower does to determine if his pockets are big enough to purchase that home.
Check our Real Estate Questions page; maybe someone else had the same doubts you have and we answered it already!
Popular Real Estate Terms
The operating expenses definition is the sum of costs or expenses a company deals to operate as a business. The term operating expenses is used in any business field and is commonly ...
Is a wholly owned government corporation administered by the Department of Housing and Urban Development. It does not by mortgages; it issues pass-through securities in which interest and ...
A contract not in writing. Oral contracts are legally enforceable except for those applicable to the sale of real estate. ...
A report published by a governmental unit which is publicly available. For example, the decennial census report published by the U.S. Department of Commerce is a public report. ...
Accumulation of housing units deemed substitutable by homogeneous households, such as those having comparable attractiveness and usefulness. ...
The definition for the gross living area published by the Appraisal Institute’s Dictionary of Real Estate 4th Edition is: “The total area of finished, above-grade residential ...
A mortgage loan where the bank provides the mortgagor the required funds to purchase property the bank has obtained through foreclosure on outstanding mortgages. For example, John obtains a ...
Geographic location that is gradually being developed as an urban area. ...
Trust beneficiary of an individual who is legally entitled to the property and financial benefits of a trust whose title is in another name. ...
Have a question or comment?
We're here to help.