You may have heard of PITI, but many do not know what it is. It is the term that refers to your total monthly mortgage payment and stands for Principle, Interest, Taxes, and Insurance. These four things add up to make up your monthly payment.
The principle is the actual amount you are paying back to the bank. Each time you make a payment, your loan amount is decreased. On the front end of the loan, a large amount of the payment will go to interest. This is what you are paying to borrow the money from the bank. Taxes are government levies that are factored into your payment and put into an escrow account which is used to satisfy tax requirements. Lastly, banks require you to carry insurance on your home. Money is escrowed for this each month.
When thinking about how much you want to pay, keep PITI in mind and ask a Realtor for assistance.
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