Remaining Balance
The outstanding principal amount still owed on a mortgage or loan at any given point in time. This balance decreases over time as payments are made, with each payment typically covering interest charges and a portion of the principal debt.
Example
“After five years of payments, the remaining balance on their mortgage was still $180,000.”
Memory Tip
Remaining balance is what "remains" on the scale after you've paid some off - like leftovers on your debt plate.
Why It Matters
Knowing your remaining balance is essential for refinancing decisions, home equity calculations, and determining how much you'll need to pay off the loan when selling your property. It directly affects your net proceeds from a sale and your borrowing capacity for future loans.
Common Misconception
The remaining balance is not the same as your payoff amount, which includes the principal balance plus any accrued interest, fees, or penalties that would be due if you paid off the loan today.
In Practice
After making payments on a $300,000 mortgage for five years, the remaining balance might be $275,000, meaning the homeowner has paid down $25,000 in principal. When selling the home, this $275,000 plus accrued interest and any fees would need to be paid to the lender from the sale proceeds.
Etymology
"Remaining" from Latin "remanere" (to stay behind) and "balance" from Latin "bilanx" (having two scales), referring to what's left to weigh.
Common Misspellings
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