What does the 'T' in PITI stand for?

The 'T' in PITI stands for Taxes, which refers specifically to property taxes associated with real estate. PITI is an acronym used in the context of mortgage payments, representing the four components that make up a monthly mortgage payment: Principal, Interest, Taxes, and Insurance.

Understanding the importance of property taxes is crucial for homeowners and buyers, as these taxes are typically assessed by local governments and contribute to funding public services such as schools, infrastructure, and emergency services. Including taxes in the calculation of monthly payments provides a clearer picture of the total housing expenses, ensuring that borrowers are prepared for all costs associated with homeownership.

This knowledge is essential for both real estate professionals and prospective buyers, as it helps in budgeting and financial planning when purchasing a home.