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
(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. ...
making land more beautiful to look at by adding improvements such as lawns, trees, and bushes. Increases the value of the property. ...
See accommodation endorser, maker, or party. ...
Device that cuts off an electric circuit when the current becomes to strong. ...
Map which documents the area, perimeter location, dimensions, and other data relating to land for purposes of assessing annual real estate taxes. ...
Tendency to go to the party or situation of the lowest level of opposition. ...
The arrangement of the walls and rooms in a structure. A two-dimensional horizontal scale drawing of the arrangements, size, and orientation of doors, rooms, walls, and windows of a single ...
Documentation of zoning requirements and changes thereto. ...
Expenditures incurred to initially purchase property, including incidental costs necessary to put the property into existing use and location. This cost is then depreciated over the assets ...
Have a question or comment?
We're here to help.