Real Estate Word of the Day: Principal

Principal refers to the original amount of money borrowed to purchase a property. It's the initial loan amount that you agree to repay over time, often with added interest. Essentially, the principal represents the actual cost of the property, excluding interest and other fees.

The principal amount directly influences the terms of your mortgage loan, including the monthly payment amount and the total interest paid over the life of the loan. Typically, larger principal amounts result in higher monthly payments but may lead to lower interest rates if you have a good credit score and meet other lending criteria.

The principal amount forms the basis for building equity in your property. Equity is the difference between the property's market value and the outstanding loan balance. As you make mortgage payments, a portion goes towards reducing the principal, thereby increasing your equity stake in the property. This equity can be leveraged for various financial purposes, such as obtaining home equity loans or funding other investments.

Looking to buy or sell your home on Staten Island? For all your real estate needs, look no further than Tom Crimmins Realty! Give us a call at (718) 370-3200, and we can provide you with professionally-trained agents who are flexible to all that you’re looking for!


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