💰 What's REALLY in Your Mortgage Payment? Let's Break Down PITI!

Thinking about buying a home? 🏡
Then you’ve probably heard this weird word: PITI (pronounced like “pity”).

But it’s not something to feel bad about. 😄
It’s just a fancy way to say: "Here’s where your monthly mortgage money goes."

Let’s break it down.

🧱 P = Principal

This is the BIG chunk of money you borrowed from the bank.

Example: You buy a $400,000 home. You put down $80,000.
That means your principal = $320,000.

Every month, you slowly chip away at that loan.
The more you pay, the more of the house YOU own. That’s called equity. 🙌

💸 I = Interest

This is what you pay the bank for letting you borrow their money.
It’s like a rental fee for the loan.

In the beginning, most of your monthly payment goes to interest.
Over time, you pay less interest and more toward the principal. This is called amortization (a big word that just means your loan shifts over time). 📉📈

🏫 T = Taxes (Property Taxes)

This pays for stuff like:

• Schools

• Fire stations

• Parks
  

Your lender usually collects this every month, saves it in a special account (called escrow), and pays it when the bill is due.

🛡️ I = Insurance

There are two types:

1. Homeowner’s Insurance – Covers damage like fires, storms, or break-ins. Required by your lender.

2. Mortgage Insurance (PMI/MIP) – If you put down less than 20%, you might have to pay this extra. It protects the bank, not you.
   

Again, these are usually included in your monthly payment and paid out of your escrow account.

🧰 BONUS: What’s Escrow?

Think of escrow like a piggy bank 🐷 your lender keeps just for taxes and insurance.

You pay into it monthly.
When bills come due, the lender pays them FOR you.
That way, nothing gets missed.

📌 If your taxes or insurance go up, your payment can go up too. If they go down, you might get money back!

📊 What About HOA Fees?

If you live in a neighborhood with a pool, park, or clubhouse, you might have to pay HOA dues (Homeowners Association Fees).

⚠️ These are NOT included in PITI or your mortgage. You pay them separately, usually directly to the HOA.