January 25th, 2011 Categories: Real Estate News
If you are buying your first home or property, it’s wise to acquaint yourself with some of the financial terms you will hear as you begin discussing what you can afford.
For instance, do you know the four components of a mortgage payment?
In financial jargon it’s know as PITI - principal, interest, taxes, insurance.
Principal - The amount borrowed or the part of the amount borrowed with remains unpaid (excluding interest); the part of a monthly payment that reduces the outstanding balance of a mortgage.
Interest – The fee charged by a lender to a borrower for the use of borrowed money. The rate depends on the time value of money, the credit risk of the borrower and the inflation rate.
Taxes - A fee charged or levied by a government on a product, income or activity – in this case, property taxes.
Insurance – A promise of compensation for specific potential future losses in exchange for a periodic payment – in this case PMI or private mortgage insurance. Lenders require buyers who have less than a 20% down payment to purchase PMI.
Call me at 703.927.4554 and let’s work together to find a home that fits your PITI requirements.