PITIA is an acronym that stands for principal, interest, taxes, insurance, and association dues. It is used to describe the total monthly cost of owning a home with a mortgage.
Principal is the amount of money borrowed from the lender to buy a home.
Interest is the cost of borrowing money and is paid to the lender each month.
Taxes are property taxes that are assessed on your home by the local government.
Insurance is homeowner’s insurance that protects your home from damage or loss.
Association dues are fees charged by a homeowner’s association (HOA) for the maintenance of common areas or amenities.
When you take out a mortgage, you will be required to pay PITIA each month. The amount of PITIA you pay will vary depending on the size of your loan, the interest rate, the property taxes in your area, and the type of insurance you choose.
Mortgage insurance (PMI) is an insurance policy that protects the lender in case you default on your mortgage. It is required by most lenders if you put down less than 20% of the purchase price of your home. PMI typically costs 0.5% to 1.5% of the loan amount each year. PMI is added to your monthly mortgage payment and thus affects the PITIA.
In Encompass, you can find and edit the PITIA on several sections.
In the Borrower Summary || Enhanced form:
Go to the Transaction Details section and click on the Edit icon next to Total Monthly Payment.
Or go to the Income, Assets, Liabilities, and Expenses section and click on the Edit icon next to Proposed Housing Expense. This will open the Total Monthly Payment window.
In the 1003 URLA – Lender form:
Go to L3. Mortgage Loan Information and go to the Proposed Monthly Payment for Property section.
The Total Monthly Payment window and the Proposed Monthly Payment for Property section will show a breakdown of the proposed monthly payments.
Each item in here can be edited or locked.
Clicking the Edit icon next to each entry opens a window that allows for further edits.
Editing Subordinate Lien(s) opens the Other Financial Payment Calculation. You can derive monthly payment from Loan Amount, rate, and term.
Editing Homeowner’s Insurance opens the Hazard Insurance window. You can calculate insurance based on a percentage of the loan amount, purchase price, or appraised value.
Editing the Supplemental Property Insurance opens the Proposed Supplemental Property Insurance window. You can add Flood Insurance monthly payments and other insurance fees.
Editing the Property Taxes opens the Taxes window. You can calculate the monthly tax payments based on purchase price and tax rate. You can also use or update the monthly values from the itemization form with city property taxes, tax reserves, and other tax fees.
Editing the Mortgage Insurance opens the MIP/PMI/Guarantee Fee Calculation. You can find the Get MI button here to automatically calculate monthly mortgage insurance based on loan term.
Editing the Other fees opens the Proposed Other Expense window. You can add additional fees that need to be considered for monthly payment calculations.
Remember that any changes made in the Total Monthly Payment will reflect in the DTI.
