What are Part of the Loan Payment

Sometimes Called PITI

 
  • •P = Principal – the portion of your payment that reduces you loan balance
  • I = Interest – the portion of your payment that is interest and generally deductible for tax purposes
  • •T = Taxes – 1/12 of the annual property tax payment is reserved so the lender can pay your property taxes when due.
  • •I = Insurance – 1/12 of your annual hazard insurance bill is reserved so the lender can pay your hazard insurance when due.
  • •Mortgage Insurance – if you have less than 20% down payment you might be required to pay mortgage insurance which protects the bank against default