Question 1

What does PITI stand for in a mortgage?

Accepted Answer

PITI stands for Principal, Interest, Taxes, and Insurance. It represents the full monthly cost of homeownership: your loan principal and interest payment, monthly property tax escrow, homeowners insurance escrow, and PMI if applicable.

Question 2

When does PMI go away?

Accepted Answer

PMI (Private Mortgage Insurance) is automatically cancelled when your loan balance reaches 80% of the original home purchase price. For a $400,000 home with 10% down, PMI cancels once you've paid the balance down to $320,000.

Question 3

How much house can I afford?

Accepted Answer

The standard guideline is that your total monthly housing payment (PITI) should not exceed 28% of your gross monthly income. Lenders also look at your total debt-to-income ratio, which should generally stay below 43%.

Question 4

What is the difference between a 15-year and 30-year mortgage?

Accepted Answer

A 15-year mortgage has higher monthly payments but significantly lower total interest paid — often 50-60% less than a 30-year loan. A 30-year mortgage has lower monthly payments but you pay much more in interest over the life of the loan.

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