| Real Estate Terms -> What is Principle & Interest (P&I) |
Principle & Interest (P&I)
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What is Principle & Interest (P&I)? |
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A monthly loan payment includes the Principle which is a small repayment of the outstanding loan amount. Over many years, the Principle paid each month will eventually pay off the entire loan and no more payments will be required. The monthly payment will also include the Interest for the loan which is the cost of borrowing. The Interest is calculated each month by taking the outstanding loan amount and multiplying it by the annual interest rate and dividing it by 12 months. Together, the Principle & Interest make up the loan payment, however this is not the PITI or total monthly payment which may include Mortgage Insurance and Hazard Insurance. |
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