What component is NOT typically included in PITI?

When discussing the components of PITI, which stands for Principal, Interest, Taxes, and Insurance, it's essential to understand what this acronym encapsulates. PITI represents the four key payments that a homeowner typically makes as part of their mortgage loan payment.

Principal refers to the portion of the mortgage payment that goes toward reducing the loan balance. Interest is the cost of borrowing the principal and is calculated as a percentage of the remaining loan balance. Taxes usually refer to property taxes that are assessed by local governments and may be included in the monthly mortgage payment to be paid into an escrow account. Insurance typically includes homeowners insurance, which protects the property against damage and liability.

Utility costs, however, are not included in PITI. These expenses, such as water, electricity, gas, and other services used in the operation of a home, are variable costs incurred by the homeowner but are separate from the mortgage payment itself. Homeowners must budget for utilities in addition to their PITI payments, but these costs do not form part of the primary mortgage components represented by PITI.