Finance
PITI refers to which components of a Massachusetts monthly mortgage payment?
APrincipal, Interest, Title, Insurance
BPrincipal, Interest, Taxes, Insurance✓ Correct
CPayment, Interest, Title, Indemnification
DPrincipal, Income, Taxes, Insurance
Explanation
PITI stands for Principal (loan repayment), Interest (cost of borrowing), Taxes (property taxes often escrowed), and Insurance (homeowner's insurance often escrowed). This represents the total monthly housing payment.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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