What financial concept refers to the initial amount borrowed through a mortgage?

The financial concept that refers to the initial amount borrowed through a mortgage is known as mortgage principal. This amount represents the core loan sum that the borrower is obligated to repay, excluding any interest, fees, or taxes. Understanding the mortgage principal is fundamental for potential homeowners and mortgage professionals, as it is the basis for calculating monthly payments, determining interest owed, and establishing equity in the property over time.

Equity, on the other hand, refers to the difference between the market value of the property and the amount still owed on the mortgage. This value can change over time as mortgage payments are made or as the property appreciates or depreciates in value.

The interest rate is the cost of borrowing money, typically expressed as an annual percentage of the mortgage principal. This rate can significantly influence the total cost of the mortgage over its duration.

Closing costs are fees associated with the transaction of acquiring a mortgage, which can include appraisal fees, title insurance, and loan origination fees, among others. These costs are incurred during the closing phase of the mortgage process and do not pertain to the initial borrowed amount itself.