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
Rental due on the leased property is formulated as a percentage of sales volume. There is typically a minimum rental specified. An example is a retail store that pays rental based on its ...
Gradual and steady increase in the general price level which is bearable in the near term but may result in significant long-term price increases, See also galloping inflation. ...
Obtaining all the money needed for a real estate project's development. The acquirer/developer does not need to give any of his own funds for upfront costs. The developer also does not have ...
When talking about the open space ratio we are referring to a term that is used in zoning laws and regulations. The open space ratio is a term used to measure open space on a developed land ...
Loss of property from nonfulfillment of some duty or condition. In some cases, forfeiture is required by a court order, whereas in other cases the nonfulfillment of a contractual debt is ...
An easement granted to a public utility. ...
Relationship between individuals or entities out of which exists a mutual interest. An example is a privity of contract among the contracting parties concerning the actions each are to take. ...
Court having the responsibility of performing probate of wills and administering estates. In certain states, a probate court can appoint guardians for minor children of an estate. ...
Appraisal approach where property values are estimated by comparing current comparable sales. See also market approach. ...
Have a question or comment?
We're here to help.