Which of the following components is NOT included in PITI?

The correct answer highlights that the loan origination fee is not part of the PITI components. PITI stands for Principal, Interest, Taxes, and Insurance, which are the key elements of a monthly mortgage payment.

Principal refers to the portion of the payment that reduces the original loan balance. Interest is the cost of borrowing the money, calculated as a percentage of the remaining loan balance. Taxes typically relate to property taxes assessed by the local government, and insurance usually pertains to homeowners insurance intended to protect the property against damage or loss.

A loan origination fee, on the other hand, is a one-time charge by the lender for processing a new loan application. It is an upfront cost and not included in the monthly payment structure that PITI represents. Understanding PITI is crucial for homeowners when budgeting for their mortgage, as it encompasses ongoing monthly obligations rather than initial loan application fees.