See: Subprime. See: Lender. See: Loan.
These are the thrill junkies, the banking analog to the guys who jump out of airplanes at night from 37,000 feet and just land wherever they see fit. On the one hand, they're loaning money to meth heads and ex-prisoners and ne'er-do-wells...and on the other hand, they're lending to teenagers with no credit, families new to America, and those who...credit-stumbled in the past. So they charge a lot of rent on the principal they're loaning (i.e., the interest) and they only loan in small amounts with all kinds of strings attached.
But when the bills actually get paid on the loans and/or the loans get paid off, then these lenders make...bank. That is, the money is the same color whether it was a 3% cost loan to Bill Gates or a 17% cost loan to MethHead Harry. If Harry pays back his loan fully, then the subrpime lender has made a relative fortune versus Bank of America, who loaned money to Bill to pay for a really good dry cleaner, or whatever else he "needs."
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Finance: What is a Mortgage?345 Views
Finance allah shmoop shmoop What is a mortgage Well people
a mortgage is just dead it's alone but one with
special tax treatment For most people simply put Any interest
you pay on a mortgage to buy a home is
tax deductible Morty morton's inputs down a hundred thousand bucks
to buy a home that costs four hundred big ones
his mortgages three hundred grand at five percent interest per
year So that's fifteen thousand dollars a year he pays
to rent the money from the bank which he uses
to buy his dream home with the loop de loop
waterslide Morty earns one hundred grand a year and pays
tax on his last fifteen thousand of earnings soas faras
The irs is concerned since morty can deduct his fifteen
thousand dollars in interest against his earnings he does not
in fact earn taxable wages of one hundred grand annually
Instead he earns taxable wages of eighty five thousand dollars
a year Essentially with government is doing is sharing in
some of the cost of renting the money Taub i'm
ortiz home well why would the u s government be
so charitable Well because home ownership has been integral part
of the american dream since the u s of a
i po'ed in seventeen seventy six easy access to mortgages
and then home buying can be a hugely beneficial asset
In the vast majority of cases homes create family stability
a store of wealth and tax dollars for local schools
in the form of real estate taxes So don't feel
bad about splurging on that water slide there Morty Just 00:01:42.93 --> [endTime] remember you're doing it for the kids Hello
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