PITIMI: WHAT IS IT?

The acronym PITIMI represents the components of the monthly mortgage payment. It is defined as follows:

• P = Principal
• I = Interest
• T = Real estate taxes
• I = Insurance
• MI = Mortgage Insurance

The principal is the amount paid against the borrowed funds per month. Interest is the amount paid to the lender. Taxes and insurance are collected monthly by the lender into an escrow account. The lender pays these amounts as they become due. Mortgage insurance is paid monthly until there is at least 20% equity in the home, at which time it can be removed.

There is another component to the monthly payment that applies in some neighborhoods, i.e. the Homeowners Association Fee. This is not part of the mortgage payment, rather it is paid directly to the Homeowners Association to cover the operations of the Association. You need to know this fee before you purchase because it can be substantial in some areas.

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