What is a mortgage principal?

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  • December 26, 2023 at 8:33 pm #28866
    Geoff Massanek
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    December 26, 2023 at 8:35 pm #28877
    Geoff Massanek
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    When you apply for a loan, the amount that the bank approves and lends you is the principal. You need to pay back this amount in a certain amount of time agreed upon between you and the lender. The principal does not include any other fees, taxes, interest, or insurance. It is the actual balance of the loan. 

    However, apart from the principal, you don’t just pay back the principal, but also the interest (the cost of borrowing that the lender charges), property taxes, insurance, closing, and other upfront fees. Apart from this, you also need to make a down payment of a percentage of the home value which could range from 3%-20 % depending on the type of loan you qualify for.

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StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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