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 phrase used for the period in which the escrow agent communicates to both the buyer and the seller as to what documents or moneys have to be deposited with the escrow agent to satisfy ...
The term apportionment can be easily applied to many contexts. For example, apportionment in insurance is concerned with how the loss is allocated between two or more insurance companies ...
Founded in1934 and located in Chicago, IL with a 1993 membership of 8,300, the IAAO seeks to ameliorate assessment standards as well as to perform ongoing property assessment research. The ...
Power or strength of economic factors an variables influencing the real estate market. For example, real estate values may decline in times of recession because people cannot afford to buy ...
Generic name given for any association of property owners sharing an interest in commonly owned property. Community associations may be developed in condominium, cooperative, or housing ...
Written obligation of a borrower that is backed by collateral in the event of default. The lender must assure himself that the market value of the security equals or exceeds the amount of ...
Type of investment company that invests money in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive income from the ...
The meaning of a guarantee covers a legal and financially-binding agreement signed between three parties involved in real estate or financial transactions. In this document, typically ...
In real estate and across the nation, you will see different types of house structures, frames, and aspects. One of those is the A-frame type. This is an architectural style that leans ...
Have a question or comment?
We're here to help.