Mortgage payments consist of two or four parts: Principal and Interest (P & I) or Principal, Interest, Taxes & Insurance (PITI). A portion of each payment pays the interest that is due and the remaining portion reduces the principal. If taxes and insurance are included in the payment, that portion of the payment is escrowed and is paid to the county when taxes are due and to the insurance company when the homeowners' policy premium is due. This process of the paying of the principal and interest is called amortization.