Understanding PITIIf you’ve ever applied for a home mortgage – or you plan to do so soon – then you are likely familiar with the fact that you will be required to repay the lender both principal and interest. But, as they say in late night infomercials, “Wait, there’s more!” You will probably hear the term PITI.
In fact, in some cases, there’s much more!

That’s because typically, when you have a mortgage payment that you’re making to a lender, it won’t just include the principal and the interest on that loan, but also rolled into the monthly payment are taxes and home owner’s insurance. This is what the acronym PITI stands for: Principal, Interest, Taxes, and Insurance.

PITI should not be confused with another, similar-looking acronym, PMI. This refers to private mortgage insurance. This is a type of insurance that helps the lender to minimize its risk if a mortgage borrower puts down less than 20% of the purchase price of a home that’s being financed. If you are subject to PMI, though, this amount is typically also added into the monthly mortgage payment.

With all of this in mind, when you are estimating the amount of house payment that you can comfortably make, be sure that you don’t just stop with principal and interest. Rather, you also need to consider these other possible obligations as well. That way, there won’t be any surprises down the road.

If you are planning to purchase a home soon, we can work with you on finding the ideal place for you – one that fits your size and location requirements, as well as your budget. Just give us a call today to get started. In addition, if you own your present home, we’ll also give you a free, no obligation valuation estimate, so that you’ll know where to begin with regard to list price.