For individuals outside the sphere of the financial industry, understanding common jargon and acronyms might at first glance appear intimidating. At Hunter Financial Group, loan specialists take the time to make sure customers understand financial terms found throughout the mortgage loan process. Two such terms are PITI and PMI.
PITI is what makes up the monthly loan payment. The letters in this acronym stand for principal, interest taxes and insurance. The last term, insurance, often takes the form of private mortgage insurance, or PMI for short.
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The principle is the price of the property itself. This amount is less than the total loan amount which takes interest, real estate taxes and private mortgage insurance into account. Loans are repaid based upon an amortization schedule.
At the start of a mortgage loan, most of the money paid goes towards interest. As more and more interest is paid, money is applied to the principle. Hunter Financial Group explains homeowners own their dwellings when both the interest and principle are paid in full.
More on PMI
Lenders who intend to purchase a home without a down payment of at least 20 percent of the sale price require private mortgage insurance. In the event a borrower cannot repay a loan, PMI ensures the lender receives financial protection. Borrowers who have the required down payment do not have to pay for PMI.
Additionally, PMI is typically no longer required once the balance of the mortgage principle is paid down to 80 percent of the sale price. This leads to the final acronym of LTV. This simply stands for
loan-to-value ratio.
Hunter Financial Group: Advantages to Homeownership
Home mortgages account for the bulk of most individuals’ debts. Standard mortgages most often outline payment schedules in 15 or 30 year terms. This long period of time might sound intimidating, but homeowners enjoy a number of advantages.
The federal tax code allows homeowners to deduct the mortgage interest they pay when filing annual income taxes. In addition, homeowners begin to accumulate equity as mortgage principle is paid down and property values appreciate over time.
Hunter Financial Group looks forward to helping potential homeowners secure a loan and begin to realize the many advantages to homeownership. Hunter Financial Group also offers a number of home equity lines of credit and refinancing options for current homeowners. The mortgage loan specialists at
Hunter Financial Group pride themselves on offering innovative solutions and top-notch customer service.
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