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
Process of developing an area by planning and building homes, shopping centers, schools or churches. The development process includes the construction of streets, sewers, utilities, parks, ...
Person or entity that has title or a right to something which is typically being held. Examples are real property, corporation, and personal property. Ownership of property may be held by ...
Also called settlor. A trust created by a will starting upon the donor's death. It empowers a trust administrator to implement the terms of the trust. ...
As you’d expect, the rod has various meanings in everyday discourse. However, lesser-known is that surveyors use a rod as a land survey measurement for real estate. In a nutshell, a ...
Falsify financial records and statements to misrepresent the financial position and operating results of the business. ...
Title to property being given under a court order because the original owner failed to pay the mortgage payments and/or real estate taxes. A judgment in a lawsuit may also have forced the ...
Modification made by a municipality to the zoning of a locality. A change in zoning typically has to be requested and approved by a zoning commission and then the legislative body. It can ...
(1) Rectangular area bounded on all sides by consecutive streets. It is part of a platted area. (2) Substantial amount of real estate properties to be sold together. (3) Group of houses, ...
Portion of a deed that states the act and date of the transfer of the property. ...
Have a question or comment?
We're here to help.