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
Enclosed building that stores agricultural products (hay, livestock or farm equipment). ...
A rectangular area bordered on all sides by buildings. Often, a quadrangle is grassy with decorative landscaping. A quadrangle can be found in a central business district or on the site ...
The Asset Depreciation Range (ADR) was introduced by the Internal Revenue Service (IRS) in 1971. It was designed to help businesses determine how long to use certain assets, like equipment ...
Measures looking at the past , current an future direction of the economy. They may have an impact on the real estate market. Each month government bodies, including the Federal reserve ...
Something coming before. Examples are the year before, first lien on property, and previous owner of property. ...
A business in which one or more person, with unlimited liability, called general partners, manage the partnership. There are also limited partners who contribute capital, but do not manage ...
Heterogeneous (as opposed to homogenous) means diverse in nature applied to a place or object composed of separate and distinct parts. In other words, heterogeneous describes something that ...
(1) Judges remark in a court ruling not in and of itself embodying the law. A dictum merely illustrates or amplifies the ruling. (2) Arbitrator's ruling. ...
Written acknowledgment by an individual holding title to property that it is being held in trust for another. ...
Have a question or comment?
We're here to help.