Question 1

What is PITI in a mortgage payment?

Accepted Answer

PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a complete monthly mortgage payment. Principal reduces your loan balance, interest is the cost of borrowing, taxes are property taxes held in escrow, and insurance is homeowners insurance (and PMI if applicable). Lenders use PITI when evaluating your debt-to-income ratio.

Question 2

How does a 15-year vs. 30-year mortgage compare?

Accepted Answer

A 15-year mortgage has higher monthly payments but significantly lower total interest paid — often less than half the total interest of a 30-year loan. It also typically has a lower interest rate. The 30-year mortgage has lower monthly payments, giving you more cash flow flexibility. Most buyers choose 30-year for the lower monthly obligation, especially at high home price levels.

Question 3

When can I remove PMI?

Accepted Answer

PMI (private mortgage insurance) is required when your down payment is less than 20%. Once your loan-to-value ratio reaches 80% (you have 20% equity in the home), you can request PMI removal. Lenders are legally required to automatically terminate PMI when your balance reaches 78% of the original purchase price under the Homeowners Protection Act.

Question 4

What interest rate should I use in the calculator?

Accepted Answer

Use the current rate you've been quoted for your credit score and loan type, or use the current national average as a benchmark. As of 2024, 30-year fixed mortgage rates have been in the 6.5–7.5% range. Your actual rate depends on your credit score, down payment, loan type (conventional, FHA, VA), and lender.

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