What is PITI?
PITI is an acronym for Principal, Interest, Taxes, and Insurance. These are the 4 components of a borrower's monthly mortgage payment to the lender. The principal, or the amount borrowed, plus the interest, goes to the lender as repayment of the loan. The property taxes and homeowners insurance go into an escrow account set up by the mortgage company, which will make those payments on the borrower's behalf.
The PITI system provides a convenient way for borrowers to pay all their bills related to the loan - principal, interest, taxes, and insurance - in small installments throughout the year. This makes it easier on the borrower financially and gives assurance to the lender that all payments are being made adequately.
