Earlier this month I had a real estate counseling session with a young couple looking to purchase their first home and the term “PITI” came up in our conversation. We’ve all grown accustomed to asking our buyers to speak directly with a lender first to get “pre-qualified” for a mortgage and we’ve gotten away from having to explain this acronym, which stands for principal, interest, taxes and insurance. (PITI) Too often borrowers are convinced that they can afford a home based solely on principal and interest, but in reality, the true and correct cost of owning a home incorporates both of these things plus monthly property tax and monthly home hazard insurance payment. It’s important that our buyers understand this reality. Adjusting their expectations about the payment they can afford makes for a more realistic home search in a price range that is comfortable and much happier buyers!
Written by Mary L. Malin, ABR, CRS, GRI, REALTOR Calcagni Associates