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PITI stands for Principal, Interest, Taxes, and Insurance. Your total monthly mortgage cost includes the loan principal, interest charges, property taxes escrowed monthly, and homeowners insurance. Lenders typically require taxes and insurance to be included in your monthly escrow payment.

Private Mortgage Insurance (PMI) is required when your down payment is less than 20 percent. It protects the lender if you default. PMI typically costs 0.5 to 1.5 percent of the loan annually. You can request removal once your equity reaches 20 percent of the home value.

A 15-year mortgage has higher monthly payments but builds equity faster and costs far less in total interest. A 30-year mortgage has lower payments but roughly doubles the total interest paid over the life of the loan. Many financial advisors recommend the 15-year if you can afford the higher monthly payment.