Which component of the PITI acronym relates to the cost of borrowing money?

The component of the PITI acronym that relates to the cost of borrowing money is interest. In the context of mortgage payments, the interest represents the fee charged by the lender for providing the loan. When you borrow money to purchase a home, the interest rate is a critical factor that determines how much you will pay over the life of the loan.

PITI stands for Principal, Interest, Taxes, and Insurance, which are the primary components of a monthly mortgage payment. While principal is the portion of the loan that pays down the actual amount borrowed, it does not represent the cost of borrowing itself. Taxes refer to property taxes levied by local governments, and insurance covers homeowner’s insurance or mortgage insurance, which protects the lender against losses. Therefore, in this context, interest is specifically tied to the expense involved in acquiring the loan, making it the correct choice when identifying the component that pertains to the cost of borrowing money.