Finance (alternative)
In Maryland, a borrower's PITI payment includes:
APrincipal and interest only
BPrincipal, interest, taxes, and insurance (homeowners and possibly PMI)✓ Correct
CPrincipal, interest, taxes, and income tax
DPrincipal, insurance, title, and inspection fees
Explanation
PITI = Principal + Interest + property Taxes + Insurance (homeowners insurance and PMI if applicable). Lenders use PITI to calculate the front-end debt-to-income ratio.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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