PITI stands for Principal, Interest, Taxes, and Insurance โ the four components of a total monthly mortgage payment. Principal and interest go to the lender; taxes and insurance may be escrowed.
A 30-year mortgage has lower monthly payments but more total interest. A 15-year mortgage has higher payments but saves significantly on interest over the life of the loan.
Fixed-rate mortgages have the same interest rate for the entire loan term. Adjustable-rate mortgages (ARMs) have a fixed rate for an initial period, then adjust periodically based on market rates.
Extra principal payments reduce total interest and shorten your loan term. Even one extra payment per year can save thousands. Ensure your lender applies extras to principal, not future payments.
PMI (Private Mortgage Insurance) protects the lender if you default. Required with less than 20% down on conventional loans. You can request removal at 20% equity and it's automatically removed at 22%.
Property taxes are typically collected monthly with your mortgage payment and held in escrow. Tax rates vary by location (0.3%-2.5% of home value). Tax increases raise your monthly payment.