PITI (Principal, Interest, Taxes, Insurance)

Definition

The four components of a monthly mortgage payment. It's the financial encapsulation of homeownership—the most boring acronym that affects your budget more than anything else.

Example Usage

The lender calculated that PITI would be $2,500 monthly, which was within the borrower's debt-to-income ratio.

Origin

Mortgage industry terminology, standardized in lending practices

Fun Fact

Many people forget about taxes and insurance when calculating affordability, then get blindsided when the actual payment is higher than expected.

Source: Mortgage Lending Standards

Related Terms

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Non-Recourse Loan

A loan where the lender's only recourse upon default is to seize the collateral (the property); they cannot pursue the borrower's other assets. Basically, the bank gets the house or nothing—making borrowers sleep better and lenders stress more.

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cosmetic rehab

Property improvements limited to aesthetic updates like paint, flooring, and fixtures without addressing structural or mechanical systems. It's the difference between a facelift and actual surgery.

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Accredited Investor

Someone meeting SEC wealth requirements ($200,000+ annual income or $1M+ net worth) eligible for private real estate securities—basically the rich kids' club.

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as-is condition

A sale term indicating the property is being sold in its current state with no repairs, warranties, or guarantees from the seller. Translation: buyer beware, because that mysterious smell and creaky foundation are now your problems.

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spec house

A house built by a developer on speculation without a specific buyer lined up. Building it and hoping they will come—the real estate field of dreams.

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Mezzanine Debt

A subordinated loan that sits between first mortgage debt and equity in the capital structure, typically carrying higher interest rates and equity-like features. It's the compromise between debt and equity when a developer needs more money but can't get traditional financing.

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