Principal

The term “Principal” in real estate usually refers to the original amount of money invested or borrowed, excluding any interest or dividends.

In real estate, the term “Principal” refers to the original amount of money borrowed in a mortgage before interest is applied. It is the base amount upon which the lender calculates the interest for the loan. The principal is typically repaid over the term of the loan through a series of scheduled payments, gradually reducing the outstanding debt. When a borrower makes a mortgage payment, it typically includes an allocation for both principal and interest.

Alternatively, the term “Principal” refers to the main party involved in a transaction, which could be the buyer, seller, landlord, or tenant. In a brokerage agreement, the principal is the individual who has authorized the real estate agent or broker to act on their behalf in a transaction. This can include the selling, buying, or leasing of a property. The principal entrusts the agent or broker with certain responsibilities and makes the ultimate decision in the transaction. The term can also refer to the amount of money that is originally borrowed in a mortgage loan, excluding interest or additional fees.