Florida Mortgage Terms: PITI (Principal, Interest, Taxes, and Insurance)


PITI : Principal, Interest, Taxes, Insurance

What is PITI?

If you’re looking to obtain a residential mortgage loan, then you’ve come to the right place! If you’re simply looking for some information on understanding what PITI is, this article is just as useful for getting a good grasp on the concepts and facets to your home loan and mortgage payment terms.

Breaking Down Florida Mortgage Terms: What is PITI?

When you pay your mortgage loan, you pay for your PITI.  PITI is an acronym which stands for Principal, Interest, Taxes, and Insurance, and is often associated with mortgages. Basically, your PITI is everything that comprises your mortgage payment if the US is where you live. Before you enter into a Florida mortgage payment agreement, it’s important for you to first understand what you are fully going to be paying for each month, why, and what your best mortgage rates are for your area and your needs.

Florida Mortgage PITI: P for Principal

What is principal? With Florida mortgage loans, the capital sum that is owed to your lender is defined as your principal. In simplest terms, once you’ve made your down payment, principal is merely the rest of the amount that is due to pay for the entire price of your home. It’s really as straight forward as that.

There is, however, a thing called principal repayment, and this can come into play in varying degrees depending on what sort of mortgage your lender is provided you with. Depending on the type of Florida mortgage loan you acquire, your lender will most likely offer a loan that is interest heavy in the beginning and principal rich at the end, or vice versa. Many are not equal parts every month, though, as many homeowners find special needs in arranging repayment for their principal in certain ways.

Florida Mortgage PITI: Interest

Yep, you guessed it – the ‘I’ is for interest! Understanding interest is one of the very most important things to comprehend fully before obtain a home loan. In technical terms, this ‘I’ actually represents the dollar value sum instead of a rate. Calculating mortgage interest in 2013 is different than the past, and there are many ways in which you can due to mortgage being amortized. What is mortgage amortization? It is a type of mortgage loan wherein the lender arranges the borrower to have a mortgage repayment where they pay a fixed amount throughout the entire mortgage. As a result, many people see an advantage in having a fixed rate because their interest rate will remain the same even as inflation affects the economy.

Florida Mortgage PITI: Taxes

The type of taxes referred here are obviously none other than property taxes. This is the most variable of all the factors in PITI and your Florida mortgage loan. Check with your local government to find out the exact property tax rate you should expect to pay in your area.

Florida Mortgage PITI: Insurance

And last but not least is the final ‘I’, which stands for insurance. Understanding insurance is important before you speak with a lender to obtain a Florida mortgage loan, as you may be misinformed on why its actually good for you to take on paying your lender’s insurance. When you’re able to ensure the lender against the possibility of defaulting on the home and your mortgage, your mortgage rate will be cheaper in the long wrong because of the lender’s discretion taken.

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