Hudson Valley NY Real Estate


What is P.I.T.I -- And How It Can Help YOUR Monthly Budget!


Courtesy of:

Carla Muss-Jacobs, ABR, CEBA, e-PRO, Realtor

Beaverton, OR

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Broker/Owner EBA Portland, LLC

Office Phone: (503) 810-7192

Cell Phone: (503) 810-7192


EBA Portland exclusive buyer agent beavertonFor those of us in the real estate / mortgage business, we're very familiar with the acronym:  P.I.T.I.

NO!  It's not a healthy pocket bread. 

A first-time buyer should know about this, and it's a handy, simple group of letters -- that could save you money and help with your monthly budget planning!

P.I.T.I = Principal, Interest, Taxes and Insurance.

Let's examine it all separately.

Principal: This is the total amount of money you will owe the bank for your loan.  The "principal balance" of your loan is divided over the life of your loan AND there will be a monthly amount of principal that you will be obligated to pay back.

Interest: This is the "fee" . . . the interest amount that you agreed to pay the bank for the loan.  If you have a 4.75% interest rate, you will have this amount calcuated as a per monthly amount. 

NOTE:  I might as well add that the bank 'amortizes' your loan.  The principal balance is not really being reduced the first seven, or so, years of the life of your loan (if you have a 30 year fixed).  You are paying the mortgage per month and the majority of that amount will be INTEREST.  The banks have set this system up by design.  There has been study after study done that buyers live in a home, on average, 7 years.  So . . . the banks make their money with the interest on the loan. 

Taxes: If we learned anything from the '70's and Superfly, there will be: taxes, death and trouble.  Taxes are your propety taxes.  These property taxes can be set up to be paid with your mortgage, and the yearly amount is divided by 12 months and can be added to your monthly mortgage payment.  For me, I like having my taxes INCLUDED in the mortgage payment.  I don't get a property tax bill around Thanksgiving!

Insurance: The property you are buying will need to be 'insured' for hazards.  Do NOT confuse this "insurance" as Mortgage Insurance (that's something else).  The lender will require that their investment be insured against hazards, such as: fire, wind, and what might be typical for your local area.

The TOTAL will be your P.I.T.I. monthly payment

Be sure to ask your loan rep / banker / mortgage professional if the monthly payment they're quoting you is the P.I.T.I . . . the total amount of what you will be obligated to pay per month. 

Some lenders / loan reps / bankers MAY just quote the P&I (Principal and Interest) and NOT include the Taxes and Insurance.  These amounts WILL be due . . . and should be considered when you are establishing your MONTHLY BUDGET!


Representing Buyers Since 1999
Carla Muss-Jacobs, ABR, CEBA, e-PRO, Realtor(r)
EBAPortland, LLC
YOUR Exclusive Buyer's Agent

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Debbie Walsh, GRI, CNE, CHMS, REM | Office (845) 283-3036 |

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WINNER 2015, 2016 & 2017 Hudson
Valley Five Star Real Estate Agent

Top Agent Magazine Honoree 2015 & 2016

Comment balloon 2 commentsDebbie Walsh • July 30 2009 01:51PM


Thanks Debra!  We will never forget Insurance again.  Up here in Canuck land we usually say PIT, and the home insurance is forgotten, so thankfully you took pity on us and gave us a new acronym - PITI !...........I know, I know, we are making no sense, but its late up here in old Canuck land, and today has been a very long week! Gotta go catch some zzzzzz's, see ya tomorrow Debra! - P 

Posted by Al & Peggy Cunningham, Brokers, Our Family Wants To Help Your Family! (RE/MAX West Realty Inc., Brokerage) over 10 years ago

Hey Guys!  Yes it has been 2 very long weeks and I hope to get back to "here" real soon!


Posted by Debbie Walsh, Hudson Valley NY Real Estate 845.283-3036 (Shahar Management) over 10 years ago