In plain English
Principal is the actual amount of money you borrowed to buy the home. Each mortgage payment is split between principal (paying down what you owe) and interest (the lender's cost for lending it to you).
Why it matters
Early in a mortgage, most of your payment goes to interest rather than principal — understanding this helps set realistic expectations about how fast you build equity.
Where you'll run into it
Guides and tools on TheBuyingPath that cover principal in context.
Related terms
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