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
A land property estate contingent upon the occurrence or lack of occurrence of a particular event whereupon it can be created, augmented, or dismantled. ...
Money paid for a real estate project or investment that can be taken off on the tax return as an expense. Expenditures made during construction of a building that do not go directly into ...
A special agent in real estate is a real estate agent hired to do a specific task or job, as opposed to a general agent, who is a real estate agent who can do any task he or she is assigned ...
Operating property for business use, such as managing an office complex. ...
Gentrification is an urban development phenomenon wherein a specific area changes its population profile by way of an economic appreciation of its real estate. The best way to understand ...
Easement with the objective of keeping scenic beauty or to forbid constructing something else blocking that view. The property is retained in its natural setting. ...
Gift of real property as stipulated in a will. ...
An attached dwelling in a multiple housing complex having at least two floors and usually a garage. Such dwellings are typically found in condominiums and cooperatives. ...
Cubic unit of measure for a board one-foot long, one-foot wide and one inch thick, or 144 cubic inches. These measurements are not actual, since they are stated prior to finishing and ...
Have a question or comment?
We're here to help.