Mortgage Definitions: PITI but not the Pity you think.

As we continue the series of Mortgage Definitions brought to by California Home Strategies we take a look today at PITI. This is definitely “PITI” but not the pity you think.

PITI: This stands for Principal, Interest, Taxes and Insurance. If you have a loan with “impounds” which is your taxes insurance are included in your monthly payment then the payment you make every month is PITI. If you have a loan with Mortgage Insurance this would also be included in the monthly payment but is not part of the PITI definition.  PITI is also used in the calculation of your Debt to Income ratios.

It is important to understand what PITI is. Dave Ramsey recommends that you total mortgage (PITI) not exceed 25% of your gross monthly income. Consult your mortgage broker to see what is right for your family. The standard FHA guidelines require a 31/43 Debt to Income.

Thank you again for reading. Until Next Time.