PITI
mortgage-lingo-explained
Mortgage

Many people are confused about what is the meaning of PITI. According to some sources, it is the first paycheqement in homeowners' loan. PITI stands for principal in addition to interest. In other words, it is the principal amount less the interest rate or loan premium paid by borrowers on mortgage loans. Besides, principal, it also includes other principal payments such as mortgage insurance, taxes, and homeowners' personal property insurance.According to mortgage companies, it is normal for homeowners to pay more than 40% of their gross monthly income towards principal loan payments. Moreover, mortgage payments include taxes, insurance, and property appraisal charges. If you are living on a fixed income, PITI makes sense to save up more income.As soon as you buy a home, you are required to purchase a home insurance policy with a fixed premium or rate. In addition, the lender will ask you to purchase a homeowner's personal property insurance, an amount equal to the amount decided by the lender in determining the monthly payment for your mortgage. The borrower is then required to pay back a portion of the interest and principal on these amounts. The terms of this policy are set forth in the contract between the borrower and the lender. Although borrowers have several options in paying their monthly mortgage payments, some prefer to pay their premiums in full every month so that the lender pays the entire interest and principal. This way, the borrower is able to pay off his mortgage sooner, thus reducing his financial stress.When a borrower fails to pay his principal amount in full, his credit score degrades. He may also lose his ability to qualify for mortgage loans in the future. The lower his credit score becomes, the less money he will be eligible to borrow for homes and will hence need to pay higher rates of interest.Another acronym that is commonly known among people who deal with PORT (Real Estate Owned Property) mortgages is PINI (Payment of Property Interest). It stands for Payment of Property Interest Only. It is not mandatory to pay the monthly principal amount on a PORT mortgage.Another acronym that can help you understand PORT (Real Estate Owned Property) mortgages is PINI (Payment of Property Interest Only). It is mandatory to pay the monthly principal amount on a PORT mortgage. However, the borrower can decide to pay the PINI in full each month, instead of paying it in full. It is advisable to clarify with mortgage lenders whether the PORT is mandatory or optional. You can do so by consulting your lender or by asking your real estate lawyer.A typical PORT loan will include the mortgage payment, principal, interest and taxes. The total cost of financing will be determined based on the rates, term of the loan and the property you are financing. If you use funds from the equity of your home, you can pay down the mortgage principal quickly. However, if you borrow money from someone else's house, you will be required to pay interest and taxes.To sum up, the acronym PORT (Real Estate Owned Property) represents two terms that you have to understand clearly. They are Piti, which represent the loan term, and PINI, which represent the payment of interest and taxes. Make sure you consult a mortgage broker and an attorney before going ahead and getting yourself into a PORT loan. Read my other articles about mortgage loans and principal, interest and taxes.One final point to be made about PORT financing is that borrowers sometimes overlook Piti and PINI in their calculation of mortgage payments. There are many lenders and institutions out there offering such loans. These lenders are usually referred to as commercial mortgage lenders or investment mortgage lenders.Private investors, estate agents, and private lenders are some of the people who may lend to a person with a bad credit score or one who has a poor credit history. When you apply for a Piti or PINI loan, it is possible that your mortgage lender or broker will not require you to have a co-signer. This means that you could end up paying more interest if you default on your loan obligations.Finally, remember that a piti represents your monthly mortgage payment. Just like any other loan obligation, this will be subject to various risks and costs. If you default on your loan obligations, your lender may face losses. It's best to do your homework before committing to a specific lender so you know what you're getting yourself into!

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