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What is the loan principal?

Posted by: raindrop 6 years, 7 months ago


The loan principal is the total amount of money owed on a loan.  On a standard, fixed-rate, fully amortizing loan, your loan principal will gradually go down as you make your monthly payments.  

Some loans, like interest only loans, the principal remains the same throughout the term of the loan, and your monthly mortgage payment only pays the interest.  In an interest only loan, the principal is paid in a balloon payment at the end of the term of the loan.  There are some cases where your loan principal can increase, but this is unusual and you should talk to a mortgage broker about these types of loans.


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