What do 'p' and 'i' refer to in relation to a mortgage?

In the context of a mortgage, 'p' and 'i' refer to Principal and Interest. The principal is the amount of money that the borrower originally borrowed and is responsible for repaying. Interest represents the cost of borrowing that money, typically expressed as an annual percentage rate. When making mortgage payments, a portion goes towards paying down the principal balance, while another portion covers the interest charged by the lender. Understanding this distinction is crucial for homeowners as it affects how much they pay each month and the overall cost of the mortgage over time. This knowledge also helps in making financial decisions regarding refinancing, extra payments, and understanding loan amortization.

The other options, while they may contain elements related to mortgages, do not accurately define the terms 'p' and 'i' as they are used in relation to mortgage payments.