Morgage PITI - Definition - Stands For 'Principal, Interest, Taxes & Insurance'
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PITI is important to lenders when determining loan approvals. The first reason is that it is often used as a guideline for determining the amount of assets a person must have in order to be approved for a loan. For example, a lender may require you to have '2 months PITI' in assets to qualify for a given loan. So if your PITI was $2,000 then you would need to have $4,000 in assets to qualify for that loan (assets would include checking, savings, 401K, IRA, Mutual Funds, Stocks and so on).
The second reason it is important is because lenders use it to determine your 'Top End Debt to Income Ratio'. This involves expressing your Morgage PITI as a percentage of your total income. For example, if your PITI was $2,000 and the lender's 'Bottom End Debt To Income Ratio' was limited to 40% then you would have to earn at $5,000 a month to qualify for that loan.
Other Important Morgage Terms
Payment Change Date -Those dates upon which the monthly payment amount is subject to change.
Per Diem Interest – This is Interest calculated per day. (Depending on the day of the month on which closing takes place, you will have to pay interest from the date of closing to the end of the month. Your first morgage payment will probably be due the first of the following month.)
Periodic Interest Cap - Interest 'Caps' that work to restrict the degree to which adjustable rate morgages may increase and/or decrease at pre-determined change dates.
Pledged Account Morgage (PAM) - Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce morgage payments.
"To say that I appreciate you and your company's help would be a huge understatement..."
What is Morgage PITI?
Morgage PITI is an acronym for 'Principal, Interest, Taxes & Insurance' and lenders use it to refer to the amount each of those would total on a monthly basis. 'Principal & Interest' refers to the monthly morgage payment that is due under the terms of a loan. 'Taxes' refers to the property taxes that are due and may also include expenses such as 'mello roos' taxes. 'Insurance' loosely refers to homeowners insurance &, if applicable, morgage insurance and the homeowner's association dues. In other words, morgage PITI refers to the total mortgage payments required by your loan.PITI is important to lenders when determining loan approvals. The first reason is that it is often used as a guideline for determining the amount of assets a person must have in order to be approved for a loan. For example, a lender may require you to have '2 months PITI' in assets to qualify for a given loan. So if your PITI was $2,000 then you would need to have $4,000 in assets to qualify for that loan (assets would include checking, savings, 401K, IRA, Mutual Funds, Stocks and so on).
The second reason it is important is because lenders use it to determine your 'Top End Debt to Income Ratio'. This involves expressing your Morgage PITI as a percentage of your total income. For example, if your PITI was $2,000 and the lender's 'Bottom End Debt To Income Ratio' was limited to 40% then you would have to earn at $5,000 a month to qualify for that loan.
Other Important Morgage Terms
Payment Change Date -Those dates upon which the monthly payment amount is subject to change.
Per Diem Interest – This is Interest calculated per day. (Depending on the day of the month on which closing takes place, you will have to pay interest from the date of closing to the end of the month. Your first morgage payment will probably be due the first of the following month.)
Periodic Interest Cap - Interest 'Caps' that work to restrict the degree to which adjustable rate morgages may increase and/or decrease at pre-determined change dates.
Pledged Account Morgage (PAM) - Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce morgage payments.