Answer :
The down payment less the closing charges less the purchase price is the mortgage loan's principle.
What does a mortgage look like in its simplest form?
When you enter into a mortgage with a lender, you give the lender the right to seize the property if they are unable to make the loan amount back plus the interest. You might be able to get a mortgage loan that will enable you buy a new house using the worth of the an existing home as security.
Why do individuals use mortgages?
Mortgage loans assist people in financing the purchase of real estate by taking a small portion of the property's overall worth as payment. How Do Mortgages Work A mortgage is a loan used to pay for the upkeep of a home, piece of land, or other kinds of rental properties.
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Final answer:
The principal of a mortgage loan is the amount borrowed from the bank to purchase a home, which is the purchase price minus the down payment. For example, purchasing a $100,000 home with a 20% down payment results in a $80,000 principal.
Explanation:
The principal of a mortgage loan is the amount of money borrowed to purchase a home, not including any down payments or closing costs. When calculating the principal, you take the purchase price of the home and subtract the down payment. Any closing costs related to the transaction are separate and do not directly affect the principal amount. Therefore, based on the provided options, the correct calculation for the principal of a mortgage loan would be the purchase price minus the down payment.
For instance, if Ben bought a house for $100,000 and put 20% down, his down payment would be $20,000. He would then borrow the remaining amount, $80,000, from the bank, and this would be the principal of his mortgage loan.
The principal of a mortgage loan is the purchase price plus the closing costs minus the down payment.
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