Calculating Your PITI Payment

In the language of mortgages, a PITI payment, sometimes pronounced 'pity', is an acronym for principal, interest, taxes and insurance. It is important to calculate your PITI payment, because it is the amount that you have to pay each month. Do not make the mistake of looking only at the principal and interest payment; your actual payment has the possibility of additional hundreds of dollars more per month.

Principal and Interest

The principal and interest payment is not difficult to figure out. There are many online mortgage calculators available that allow you to enter your loan amount, interest rate and term to calculate your monthly payment. Remember that if you have an adjustable-rate mortgage, this amount can vary, so fixed-rate mortgages are a safer bet.

Taxes

These are property taxes. Taxes are collected by the city or county and can vary greatly from place to place. Go to the website of your city or county and find out your property tax rate. Taxes are generally collected twice a year, but many mortgage products allow you to pay monthly into an escrow account from which your property taxes are paid.

Insurance

You can get a quick online quote for homeowner's insurance, based on your location and appraised home value. Do not forget to include mortgage insurance if you are required to carry it.

It is important to know what you are getting into before buying a property and to make sure that you can afford it. By calculating your PITI ahead of time, you can make sure you do not get yourself into a situation that you cannot afford.