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
Note having more than one maker, if one or more of the makers default on the note, all makers are sued jointly, rather than just one or all, to make restitution ...
Also called an installment sales contract or contract foe feed. A type of creative financing in real estate allowing the seller to finance a buyer by allowing him or her to make a down ...
Depressed or raised framed in portion of a wall, ceiling, or door. A panel board pattern is decorative and gives the effect of a series of highlighted squares or rectangular pieces. ...
Right of a current stockholder to maintain the percentage ownership in a real estate company by purchasing new shares on a proportionate basis before they are issued to the public. It ...
Inverted gable roof design where the two side slope upward from the center to the eaves with a valley in the middle. The roof resembles the wings of a butterfly, hence, the name. ...
The definition of front foot is a person or an entity that has an advantage or has the initiative. It could also be used to suggest that someone is taking an offensive position. Based on ...
The adjudication definition is a legal ruling or judgment used in the justice system when a case is settled or finalized. To define adjudication, we must look at the justice system and how ...
Emotional value of property to the particular person. An example is an owner of a house who is attached to it because his deceased parents lived there. ...
The landing at the bottom and/or top of a stair case providing support for the structure. ...
Have a question or comment?
We're here to help.