What is the main purpose of calculating the outstanding balance on a mortgage?

Calculating the outstanding balance on a mortgage is primarily important for tracking equity build-up. As homeowners make mortgage payments, they gradually pay down the principal balance, which in turn increases their equity in the property. Equity represents the difference between the current market value of the home and the outstanding mortgage balance. Understanding equity is crucial for homeowners as it can affect their financial decisions, such as refinancing, selling, or taking out a home equity loan.

While determining investment value, assessing borrowing capacity, and estimating property tax are important aspects of overall financial management, they do not directly relate to the primary function of calculating the outstanding balance of a mortgage. The outstanding balance directly provides insight into how much equity has been built up over time, which is why this is the most relevant choice.