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PITI – The Four Parts that Make up a Fayetteville TN Mortgage

 buying a home in Fayetteville tn, fayetteville tn real estateIf you are thinking about buying a home in Fayetteville Tennessee, chances are that you are going to need a mortgage to pay for that home. 

It is important that you know what “PITI” means in order to estimate a house payment you can actually afford and make a fully informed home buying decision.

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PITI is an acronym for the 4 parts that typically make up a mortgage payment – Principal, Interest, Taxes and Insurance.  Otherwise known as the monthly “bottom line”  or combined payment of a mortgage.   

PITI is typically quoted on a monthly basis and compared to a borrower’s monthly gross income by computing the individual’s debt-to-income ratios - the percentage of your monthly gross income (before taxes) that is used to pay your monthly debts.  

Lending institutions want to make sure that you can pay your insurance and property taxes, thus, they build those payments into your monthly mortgage payment to secure the loan.  

  • Principal – The part of your monthly payment that reduces the outstanding balance of your mortgage.
  • Interest – The part of your monthly payment that goes toward the cost of borrowing the money.
  • Taxes – The part of your monthly payment that goes toward property taxes charged by your local government. We typically collect a portion of these taxes in every mortgage payment and hold the funds in an escrow account for tax payments made on your behalf as they become due.
  • Insurance – The part of your monthly payment that pays for homeowners or hazard insurance, which provides protection against property damage due to wind, fire or other risks. Insurance costs are usually collected and paid form and escrow account.

A common guideline for debt-to-income ratios is 33/38. A borrower’s housing costs consume 33% of their monthly income. Add monthly consumer debt and it should take no more than 38%  of their monthly income to meet those obligations.

You can use this free Mortgage PITI Calculator to calculate and total the monthly principal, interest, tax, insurance, and private mortgage insurance payments that normally come attached to a mortgage.

Fayettville Tennessee Real Estate Experts

Fayetteville offers a wide variety of new and resale properties.  Homes range from one and two-story homes, gated communities, condominiums, townhomes, golf homes, equestrian properties, luxury real estate and properties with views.

 Read more about Fayetteville Tennessee…

Whether you are  considering buying a home in Fayetteville Tennessee or selling your existing home, our goal is to provide you with expert advice and exceptional customer service every step of the way. 

As a home buyer, we will listen to your needs and desires and assist you in finding the perfect home in the right neighborhood to fit for your lifestyle and needs. 

Use our extensive Fayetteville TN real estate expertise to alleviate your stress and make your home search a pleasant one. Click here for FREE personalized assistance!

As a home seller, expect nothing less than personalized service including a detailed consultation that competitively positions your home in today’s market. The consultation will include an in-depth Comparative Market Analysis (CMA). Our goal is to get your Fayetteville TN real estate in front of as many people as possible and get it sold as quickly as possible!

As an investor, we also have several services available in the preparation for the sale of REO’S and Short Sale properties. This includes a variety of professional sub-contractors who can do whatever is needed to prepare the property for sale. Once the property is ready, we can also help you with your unique marketing needs. 

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It’s about a relationship based on trust, knowledge and expertise and as our client, you can rest assured that we will do everything we can to make sure that your home buying or selling experience is a pleasant one. Give us a call today at (931) 433-4070 or email us with your specific inquiries, and let us know how we can best serve your Fayetteville TN real estate needs!  

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