Principal, Interest, Taxes, Insurance – PITI definition explanation

What is 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. Read more for examples and further explanation including related video clips and also comments

Example explains Principal, Interest, Taxes, Insurance – PITI
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.

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