Sometimes it is hard to understand what you are paying for when you are buying a home or looking into the buying process. Between the excitement of owning a home and constant to-do’s of getting everything in before closing, it can be confusing and you may forget a few things after the initial excitement has worn off or after closing is complete.
One major component of buying a home is the mortgage. You work with a lender to figure out your loan options, monthly payments, appraisals, and so much more during the home buying process. The mortgage is one thing that sticks with you each month, and after a while you may start to wonder, what am I paying for? Is there other things that make up my payment? Fear no more, here is a quick tip from one of Ennis Property Group’s trusted lenders, Ruoff Home Mortgage Sales Manager, Jennifer Reynolds, to help you understand what exactly makes up a monthly mortgage payment. All you have to remember is PITI!
What is P.I.T.I? Principal, Interest, Taxes, Insurance. Principal is the amount that pays back and reduces the loan balance. The ongoing cost of borrowing the money makes up your Interest. Taxes are the real estate or property taxes held in your escrow account. The homeowners or hazard insurance held in an escrow account are the components of Insurance. This can also include mortgage and/or flood insurance. So next time you are questioning what you are paying for, remember PITI!
If this creates more questions, give us a call and we would be happy to help you with any and all of your questions!