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:
“Today, only a fool would offer herself as the singular role model for the Good Mother. Most of us know not to tempt the fates. The moment I felt sure I had everything under control would invariably be the moment right before the principal called to report that one of my sons had just driven somebody’s motorcycle through the high school gymnasium.”
—Mary Kay Blakely (20th century)
“Upon looking back from the end of the last chapter and surveying the texture of what has been wrote, it is necessary, that upon this page and the five following, a good quantity of heterogeneous matter be inserted, to keep up that just balance betwixt wisdom and folly, without which a book would not hold together a single year.”
—Laurence Sterne (1713–1768)