The mortgage process can sometimes be confusing. And it does not help when your lender uses words or abbreviations that you do not know. This can also be known as “Mortgage Lingo”. One abbreviation that can come up is PITI. This is an abbreviation for your total mortgage payment. Here is a breakdown of what each letter stands for:
P- Principal. Your Principal is how much of your payment each month that actually goes toward paying down your mortgage balance. Any additional money you send in each month would go toward your principal and help you pay your mortgage off faster
I-Interest. This is the amount of your payment that goes toward the interest that you are paying on your mortgage payment.
T- Taxes- This means that your real estate taxes are part of your payment. Each month the mortgage company will collect 1/12th of your yearly real estate tax bill amount. That way your real estate taxes are paid by the mortgage company when they are due.
I-Insurance. This is the home insurance. Also called Hazard Insurance. Like the taxes, each payment will collect 1/12th of your yearly home Insurance bill, so when it is due the mortgage company will pay that bill.
This article gives you the definition and explanation of PITI. Keep in mind your payment may also include Monthly Mortgage Insurance. And flood insurance if your home is in a flood zone. If you do not include your taxes and insurance in your payment, the abbreviation would be PI for your total payment.
Comments(2)