Who is responsible for the principal reduction at closing?

The responsibility for the principal reduction at closing falls on the borrower. When a borrower takes out a loan to purchase a property, a portion of that loan amount typically goes towards paying down the principal balance. This is often part of the closing process, where the borrower must come prepared to cover various costs associated with the transaction, which can include a down payment that reduces the loan's principal.

In essence, once the loan is secured, the borrower agrees to repay the lender, and that repayment includes the reduction of principal. This process is fundamental to how mortgages work, as borrowers do not simply receive the loan amount; they also assume an obligation to repay it, culminating in a lower principal balance over time.

While lenders, agents, and title companies play significant roles in the transaction, the ultimate financial responsibility for the principal reduction during closing remains with the borrower, who must ensure they have the necessary funds to meet their obligations.