Principal balance, in regard to a mortgage or other debt instrument, is the amount due and owing to satisfy the payoff of the underlying obligation.
Amortized mortgage loans automatically pay a portion of each monthly payment to the principal balance with the rest being paid as interest.
An interest-only loan does not require any monies be paid toward the principal balance each month, but is allowable.
Famous quotes containing the words principal and/or balance:
“I cannot believe that our factory system is the best mode by which men may get clothing. The condition of the operatives is becoming every day more like that of the English; and it cannot be wondered at, since, as far as I have heard or observed, the principal object is, not that mankind may be well and honestly clad, but, unquestionably, that the corporations may be enriched.”
—Henry David Thoreau (1817–1862)
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