Finance Quick Answers
What is principal on a mortgage loan?
Principal is simply the unpaid balance on your mortgage loan. Your principal will change according to the process of amortization specified in your loan. Generally, your principal is reduced at an increasing rate as your loan matures (comes closer to its end date). When a principal balance actually goes up with each loan payment, that is referred to as negative amortization.
Brenda Procter, M.S., Consumer and Family Economics, College of Human Environmental Sciences, University of Missouri-Columbia
If you'd like to learn more about this and other personal finance topics, the University of Missouri offers 'Personal & Family Finance,' a correspondence course, through the Center for Distance and Independent Study (800-609-3727). Information about this course is available at http://cdis.missouri.edu/CourseInfo/DetailCourseInfo.asp?1985.
Last update: Tuesday, July 22, 2008