Finance
In Michigan, 'PITI' stands for:
APrincipal, Interest, Taxes, and Insurance✓ Correct
BProperty, Income, Title, and Insurance
CPayment, Index, Term, and Interest
DPrincipal, Index, Taxes, and Insurance
Explanation
PITI is the acronym for the four components of a standard Michigan mortgage payment: Principal (loan repayment), Interest (cost of borrowing), property Taxes (escrowed for payment), and homeowners Insurance (escrowed for 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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