When it comes to home ownership and the real estate market in Golden, Colorado in general, there are so many terms floating around that it’s understandable to want to ignore some of them. When looking to purchase property in a Golden, Colorado neighborhood such as Coal Creek and others, buyers can expect to run into at least some of these terms. Most times, you can just have an accountant, real estate agent or an attorney handle the complicated terms you don’t understand yourself. PITI is one of those acronyms you’ll want to take note of and commit to memory, however.
PITI is an important acronym that deals with your home loan payment. It is an acronym for the four types of costs that are associated with your mortgage payment. These are principal, interest, taxes and insurance.
Principal is by and large the most important. It is the original and total amount you spend on the property when you first purchased it. This is what you owe back in mortgage payments on the property, no matter how great of a deal you cut on the actual loan’s terms at the time of closing. The principal is usually paid back in increments, evenly spaced from month to month, although some people choose to pay in bulk at certain times in the mortgage’s term, as well.
The interest rate is often affected by how much money you put down on the original price of the home. It can often be negotiated lower with a higher down payment on your part. If you choose a mortgage that is interest-only or an adjustable rate mortgage (ARM), your lower initial mortgage payments are made up for by paying more interest in the long term of the loan. Your property taxes and insurance, on the other hand, aren’t automatically affected by how much the principal of your house is or your interest rate. If you live in a specific area, though, your property taxes may be higher. Similarly, if the area in which you live is prone to natural disasters like flooding or earthquakes, for example, your insurance may increase as a result, too.
As you can see, PITI is a good acronym for remembering all that you need to take into account once you have purchased a home. Most of the factors in PITI intersect in some way, so understanding this acronym’s meaning could save you a bit of frustration and confusion down the road.
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