What in the world is PITIA?

P.I.T.I.A. is often spoken of in the mortgage world, including when calculating your amortization schedule (that giant list of payments given to you at closing), when calculating whether you can afford the entire payment, or when calculating the profit or potential profit on a rental property.  Not the most exciting theme, sorry folks.  But this is a common acronym in mortgage and I just want to make sure you know what it is and how you can influence it.

PITIA is the final number at closing for your payment.  It’s the “all-in” number on your initial closing paperwork and the monthly statement that shows the costs monthly included in your total payment and the breakdown hopefully.  Here is a quick breakdown:

P – Principal – The amount of each payment that pays down the principal each month.

I – Interest – The amount that goes towards the interest each month.  Keep in mind that this is based on a perfect payment on the exact date, any change sooner makes it lower and later makes it higher…

T – Taxes – generally property tax, the portion being escrowed for taxes (see All about escrow…)

I – Insurances – as explained in “All About Escrow,” this includes hazard or property insurance and mortgage insurance.  Also, it can apply to flood insurance if your property is in a flood zone.

A – Association – this is actually maintenance fees from a condo or homeowner’s association.  Often this can be paid separately as well.

How can you help reduce PITIA? 

1. P – more down payment or less expensive home will push this down.
2. I – shopping rate or buying down the rate might help.  But most of the time, shortening the term and paying more towards principal for shorter time is the quickest way to lower interest, but it increases principal (this suggestion is opposite of number 1).
3. T – shopping for a home with less taxes to start, and asking about all possible deductions that you might qualify for, are great ways to reduce this.  Please keep in mind that Taxes and Insurance usually go up, so it matters where you start, as that will determine when you finish.
4. I – shopping for standard homeowner’s insurance, considering carefully whether you want to be in a flood zone, and finally you want to make sure you are choosing a reputable company that is acceptable to the lender and also affordable for you (deductibles).  Mortgage insurance can be avoided with 20% down to begin with, or a refinance (Lots of reasons to refinance) when your equity reaches that point, or by the choice of a separate loan product that doesn’t charge mortgage insurance.
5. A – shopping for a property in or out of a homeowner’s association, and asking carefully what they provide.

Now that you know what PITIA is, how you can influence it, and whether you would like to have a way to reduce it, you know that you can control almost every aspect of PITIA.  How can I help you?

Start here: https://www.successmortgagepartners.com/corey-vandenberg/