When and why did banks start owning houses and land? When did mortgages start?
In: 3
So far none of the answers have been ELI5-enough for me.
**ELI5**.
You want to buy a house. The house costs $100k. But you do not have that kind of money. What do you do?
Harry has the money, but he doesn’t want a house right now.
So Harry says, “Belo, I’ll give you the money to buy a house”.
And you say … “Really? There’s got to be a catch, right? What’s the catch?”
And Harry says: “There’s two catches.”
* “One is that when you pay me back over the next 30 years, you give me $110k. The extra $10k is for me being inconvenienced and not having all that money in my account for 30 years.”
* “The other is that, if you stop paying, then **I own the house**. You forfeit that house if you stop paying me, and then it belongs to me …. because it was my money that bought it!”
Make sense?
It’s the same way with car loans. The bank gives you money, you take the money and buy the car. If you stop paying the bank, they take the car!
In the end though, if you finish paying off your loan/mortgage, you own the property.
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