You will hear a lot of people refer to their PITI (pronounced like pity). This refers to your

Taxes &

Your principal & interest (P&I) are directly from your mortgage lender. This depends on how long your mortgage loan is for, also called the “Term” (10 years, 15 years, 20 years, 30 years?) and your interest rate. Typically your interest rate will be lower the shorter the term is, but not always. There are many factors that play into this aspect including your credit score, your debt to income ratio, how long you’ve been at your job and how stable your income levels are among others. Ask your lender about what goes into your P&I.

The next two can be paid separately or can be bundled into your loan in what is called your Escrow account. Your taxes are property taxes, they can vary from year to year and these are set by your local municipalities and school districts, plus any additional local taxing districts.

Insurances will most likely be required by your mortgage lender. Typically in the Florida Keys, they require Homeowners insurance, Flood Insurance and Wind Insurance. You can shop around to get your Homeowner’s insurance to find the right coverage for you. Your Flood insurance is going to be based on your elevation and will be through the NFIP or National Flood Insurance Program. This is fairly straight forward. Your Wind insurance is going to be through Citizens Property Insurance, this will depend on how hardy your home is against a hurricane or wind storm event. There are measures you can take to reduce your costs here, ask your insurance agent about ways to reduce your insurance costs.

Depending on your type of loan, you may also be required to have Mortgage Insurance as well. This is for homes with a loan to value (LTV) of greater than 80%. This means you owe more than 80% of the total value of the home. Ask your lender about loans that don’t require mortgage insurance.

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Derrick Johnson

Derrick Johnson


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