Question 1

What is PITI?

Accepted Answer

PITI stands for Principal, Interest, Taxes, and Insurance — the four components that make up your total monthly mortgage payment. Principal reduces your loan balance, interest is the cost of borrowing, taxes are your property taxes, and insurance covers homeowners insurance and, if applicable, private mortgage insurance (PMI).

Question 2

What is PMI?

Accepted Answer

Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home price. It protects the lender if you default on the loan. PMI typically ranges from 0.5% to 1.0% of the loan amount annually. It automatically drops off once your remaining balance reaches 80% of the original home value.

Question 3

How is property tax estimated?

Accepted Answer

We use average effective property tax rates by state. These are based on median property taxes paid as a percentage of median home value. Actual property taxes vary by county and municipality. Check with your local tax assessor for exact rates.

Question 4

15-year vs 30-year mortgage: which is better?

Accepted Answer

A 15-year mortgage has higher monthly payments but saves significantly on total interest over the life of the loan. A 30-year mortgage offers lower monthly payments, giving you more cash flow flexibility. The best choice depends on your financial situation, goals, and comfort level with monthly payments.

Mortgage Calculator

Frequently Asked Questions

Related Tools