Lesson 6: PITI

• PITI: principle, interest, taxes, and insurance, the four expenses in a budget mortgage payment
• Principle - balance of the loan. The amount that is owed (interest decrease = more payment towards principle)
• Interest - the "fee" paid back to lender for use of their money. (interest decrease over life of mortgage)
• Taxes - aka property taxes, the cost of public services divided by value of property for area
• Insurance - may include mortgage, homeowner's/flood insurance
• Premium amount as PMI (private mortgage insurance) - varies based on borrower's credit score and LTV
• Premium amount as MIP (mortgage insurance premium) - upfront premium as percentage of loan value at closing + annual premiums which decrease each year as principal balance decreases