Definition of "PITI"

Nezam Juman  real estate agent

Written by

Nezam Juman elite badge icon

Gulf River Realty LLC

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.

Real Estate Advice:

Check our Real Estate Questions page; maybe someone else had the same doubts you have and we answered it already!

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

The definition of population density is a way to measure the number of populations in a specific area. The method of calculating population density is by the number of people per square ...

Buying more house than a buyer can afford based on his or her income. ...

Giving of a promise or guarantee to the receiver to instill confidence. ...

provision in a written agreement allowing the prospective purchaser the right to cancel the contract if occupancy requirements are not satisfied as of a specific date. ...

Property boundary demarcated by the curb. ...

Individual who attempts to maximize his or her profitability by investing which the anticipation that a particular investment will go up in value. A speculator will generally be willing to ...

The accrued interest definition can be explained through the interest collected by a set date on financial obligations that were not paid out. As interest can be of two types, so does ...

(1) Methods that involve discounting the future cash flows generated by an income property. These techniques are used primarily for valuation. (2) Methods of selecting and ranking ...

The term market segmentation is mostly used in marketing for assembling prospective buyers in groups based on their needs and their response to a marketing action. One definition of market ...

Popular Real Estate Questions