Principal, Interest, Taxes, Insurance (PITI)
The components of a mortgage payment. Principal is the money used to pay down the balance of the loan; interest is the charge you pay to the lender for the privilege of borrowing the money; taxes refer to the property taxes you pay as a homeowner and insurance refers to both your property insurance and your private mortgage insurance. Investopedia Says:
PITI is typically quoted on a monthly basis and compared to a borrower's monthly gross income by means of computing the individual's front-end and back-end ratios, which are used to approve mortgage loans. Generally, mortgage lenders prefer PITI to be equal to, or less than 28%, of a borrower's gross monthly income. Related Terms:
Back-End Ratio
Front-End Ratio
House Poor
Loan
Mortgage
Mortgage Broker
Private Mortgage Insurance - PMI
Total Housing Expense |