What aspect of the mortgage payment calculation does PITI stand for?

PITI refers to the components involved in a typical monthly mortgage payment. The acronym stands for Principal, Interest, Taxes, and Insurance.

Understanding each element helps borrowers gauge the total cost associated with homeownership. "Principal" is the portion of the payment that reduces the loan balance. "Interest" is the fee charged by the lender for borrowing the money. "Taxes" refer to property taxes that support local government services such as schools and infrastructure. "Insurance" usually includes homeowners insurance which protects the property and the lender’s investment against damages.

This comprehensive view of PITI ensures that borrowers are prepared for all facets of their expenses, making it an essential concept in real estate transactions and financial planning related to mortgages.