Definition
Principal is the actual loan amount that excludes any fees or interest which also must be repaid.
Analysis
The principal balance is the amount of the loan that is requested by a borrower. Any amounts added to principal are considered the cost of credit.
PITI is a common acronym used by mortgage lenders, in which the “P” stands for Principal, the “I” for Interest, “T” for Taxes and the second “I” for Insurance. The principal payment is the portion of the monthly payment that is going toward paying down the principal balance.
