Question

Also called a PITI mortgage (for principal, interest, taxes, and insurance), this financing arrangement provides that an amount equal to one-twelfth of the estimated annual property insurance premiums, taxes, homeowners' association dues and/or special assessments, if any, will be paid to the mortgagee with the monthly principal and interest payment.

True
False

Answer 1

A PITI mortgage or Principal, Interest, Taxes, and Insurance mortgage is a financing arrangement where a portion of the estimated annual expenses is included in the monthly principal and interest payment made to the mortgagee. This ensures that property insurance premiums, taxes, homeowners' association dues, and special assessments are met.

Step-by-step explanation:

The statement in the question is true. A PITI mortgage or Principal, Interest, Taxes, and Insurance mortgage is a type of financing arrangement where a portion of the estimated annual expenses, including property insurance premiums, taxes, homeowners' association dues, and special assessments, is included in the monthly principal and interest payment made to the mortgagee.

By including these expenses in the monthly payment, the mortgagee ensures that these obligations are met and that the property is adequately insured and taxes are paid.