Which components are included in PITI?

Which components are included in PITI?

• A. Principal, Interest, Taxes, and Insurance
• B. Principal and Interest only
• C. Taxes and Insurance only
• D. Principal, Taxes, and Insurance

Answer: (A)

PITI refers to the four parts of a typical monthly mortgage payment: Principal, Interest, Taxes, and Insurance. The principal is the portion that reduces the loan balance over time. Interest is the lender’s charge for borrowing. Taxes are property taxes collected by the local government and held in escrow to be paid when due. Insurance is homeowners insurance that protects the property, often paid through escrow to the insurer. The other options omit at least one of these components, so they don’t describe the full monthly payment. Note that private mortgage insurance (PMI) is separate from PITI, though some lenders may include it in the total payment; standard PITI is four parts: principal, interest, taxes, and insurance.

PITI refers to the four parts of a typical monthly mortgage payment: Principal, Interest, Taxes, and Insurance. The principal is the portion that reduces the loan balance over time. Interest is the lender’s charge for borrowing. Taxes are property taxes collected by the local government and held in escrow to be paid when due. Insurance is homeowners insurance that protects the property, often paid through escrow to the insurer. The other options omit at least one of these components, so they don’t describe the full monthly payment. Note that private mortgage insurance (PMI) is separate from PITI, though some lenders may include it in the total payment; standard PITI is four parts: principal, interest, taxes, and insurance.