Principal
The amount you borrowed, or the part of it you still owe. Each payment covers interest first, and the rest pays down principal, which builds equity.
Also called: loan balance, loan amount
Related terms
Paying off a loan through regular payments over a set term. Early payments go mostly to interest; later ones go mostly to principal. An amortization schedule shows that split for every payment.
Short for principal, interest, taxes and insurance, the four parts of a typical monthly mortgage payment. Lenders use PITI, plus any HOA dues or mortgage insurance, to judge whether you can afford the loan.
The percentage a lender charges to borrow money, used to figure the interest part of each payment. It does not include fees, which is why the APR is often higher.
The part of a property's value you own outright: its market value minus what you owe on loans against it. Equity grows as you pay down the loan and as the property gains value.
Paying a lump sum toward principal and having the lender recalculate your payment over the remaining term at the same rate. It costs far less than refinancing, but not every lender or loan type allows it.