The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance. The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage.
Interest is the fee charged for borrowing money.
Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance. A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. The acquisition of property through the payment of money or its equivalent.