PITI is an acronym for principal, interest, taxes, and insurance—the sum components of a mortgage payment. PITI is also included in calculating a borrower’s back-end ratio, the sum total of his monthly obligations against his gross income.
Principal pays down the loan balance; interest is the cost of borrowing; taxes are the property taxes; and insurance includes homeowners insurance and mortgage insurance, if applicable.
Because PITI represents the total monthly mortgage payment, it helps both the buyer and the lender determine the affordability of an individual mortgage. A lender will look at an applicant’s PITI to determine if they represent a good risk for a home loan. Buyers may tote up their PITI to decide if they can afford to purchase a particular home.
Real estate technicalities like this could be a difficult thing for a layman to understand. Thus, to eliminate this concern of yours, Roodland is providing professional expertise to guide you through any service related to real estate. Drop a mail at info@roodland.com to connect the experts of the real estate industry.