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Principal Balance
Updated
January 19, 2023
In the case of a mortgage or other debt instrument, the principal balance is the amount owing and owed to meet the payback of an underlying obligation, less any interest or other penalties. Mortgage loans that are amortized automatically apply a portion of each monthly payment to the principal debt, with the remainder paid as interest. An interest-only loan does not need payments toward the principal sum each month, but such costs are permitted.
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