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 definition of property acquisition cost in real estate is the total recorded cost of a piece of real estate after reductions in price, incentives, closing costs and any other ...
Listing of property that is open, meaning there is no one real estate agent who has the sole right to sell the property. ...
Threat of violence to obtain a contract. ...
If you are a real estate investor and you come across this term, you might wind up wondering … What is the operating expense ratio? The operating expense ratio (OER) is a way for ...
Registered real estate broker who charge a flat fee, rather than a commission, for real estate purchase and sale transactions regardless of the property's sale price. No fee is charge if ...
An easement granted to a public utility. ...
Governmentally held records of public transactions giving constructive notice that documentation exists confirming the transaction. ...
The result of combining two or more parcels of land so that the one large parcel has more value than the sum of the individual parcels. ...
Buyer who is acting in good faith, is not aware of any outstanding claims or rights of others to the property, and has given valuable consideration as part of the business transaction. ...
Have a question or comment?
We're here to help.