GUIDE深度 · Deep dive
How a Mortgage Payment Is Built
A mortgage payment usually has four parts: principal, interest, property tax and insurance, known as PITI; HOA adds another. Lenders often escrow taxes and insurance, so the payment you see can be much higher than P&I.
P&I and escrow
P&I is principal and interest under the amortization formula; early payments are mostly interest.
Escrow collects property tax and insurance on your behalf; it is not an extra fee.
Why the payment changes
Adjustable rates change; property tax reassessment, insurance increases and HOA changes also move the escrow portion.
Fixed-rate P&I stays the same, but tax and insurance can change each year.
FAQ
What is PITI?
Principal, interest, taxes and insurance.
Is excess escrow refunded?
After the annual analysis, excess is refunded or a shortage is collected, depending on the servicer.