Home Loans 101: What Does "Principle" Refer To?
The "principal" on a mortgage loan refers to the outstanding balance due on the original loan amount. As time goes by and you diligently make your monthly payments, the principal balance gradually decreases.
It's like watching a savings account grow in reverse – instead of depositing money, you're reducing what you owe. It's a wonderful feeling to see that number decrease over time, inching you closer to the glorious moment when you finally pay off your mortgage in full.
Understanding the principal empowers you to track your progress and make informed financial decisions.
So, the principal balance is not just a number on your statement; it's a measure of progress, a symbol of your commitment, and a sign that you're building equity in your home.