Think about the acronym PITI …
Did you know that it makes up your monthly mortgage payment? PITI stands for principal balance of your loan, interest payments, property taxes, and cost of insurance.
Breakdown of a mortgage payment
The four basic elements of a monthly mortgage payment are:
- Principal: The original amount of money borrowed on the mortgage loan. It’s the amount of your payment that is paid down monthly. For example, if you purchase a home for $150,000 and put down a 20% down payment, your principal amount is $120,000.
- Interest: The amount the lender is charging you to borrow money is usually a percentage of the principal loan amount. The interest rate is a percentage used to determine how much interest you owe on the loan for each payment.
- Taxes: Property owners are required to pay property taxes to the city or county where the home is located. The rates are based on the assessed value of your property. When you pay your property tax payments, they may go into an escrow account. An escrow account is much like a savings account to help pay for property-related expenses including your property taxes. When the tax bill is due, the mortgage company will make the annual payment on your behalf if an escrow account has been established for you.
- Insurance: Homeowners insurance will cover your home and personal belongings if damaged or destroyed by loss and can protect you from liability issues. You may also have private mortgage insurance (PMI). If your down payment is less than 20%, you are required to pay for PMI. Contact an Adirondack Bank mortgage loan originator for full details.
Are you ready to buy a home?
Adirondack Bank is here for you when you’re ready to buy a home. We provide expert advice from the beginning of your home financing journey to the end. Whether it’s your first home or a refinance, we have the mortgage product that will suit your needs. Let our team of Mortgage Loan Originators help you choose the product that’s right for you. For more details, visit your local branch or mortgage services online.
The information in this article was obtained from various sources not associated with Adirondack Bank. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Adirondack Bank is not responsible for, and does not endorse or approve, either implicitly or explicitly, the information provided or the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Adirondack Bank makes no guarantees of results from use of this information.