Introduction to Mortgage Loans | Housing | Finance & Capital Markets | Khan Academy
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Introduction to mortgage loans. Created by Sal Khan.
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Finance and capital markets on Khan Academy: Most people buying a home need a mortgage to do so. This tutorial explains what a mortgage is and then actually does some math to figure out what your payments are (the last video is quite mathy so consider it optional).
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Thank you Khan! THIS right here is one of real world essentials EVERY kid should be taught... I've always believed that this stuff should be required teaching in high school.
I remember in school we had a subject called “ FabricTextiles technology”. What a joke as it was literally a class showing you how to design clothes using a sewing machine.
….but then the banks can’t swindle people as easily…..
this guy covers every subject. what a genius
Khan Academy: Getting me through university in the way of Matrices tutorials, and now getting me through life years and years later in the form of teaching me about housing and mortgage loans. You really are the best! :D
In my opinion, everyone thinking of buying a home needs to watch this video and understand how the mortgage loan process works. You have provided a great service to the home buying public.
This video is extremely helpful. As a freshman in college, i know a lot less than i should about living in the real world than i should. This video is very clear, and a lot makes sense to me now. It would be very nice if you could continue to put out some of these "general knowledge in the real world" videos for us who dont know anything about it, such as myself. Thanks again for the great vid!
Thank you, thank you, thank you!
I had to write an article on mortgages especially oriented to people from the US and other English speaking countries, and I'm from Venezuela, so this video was hugely helpful for me to understand mortgages, and be able to write something that will hopefully help those actually considering getting a mortgage!
Thank you for your efforts in making these videos... I've watched many of you videos and find them very educational. Best!
Sometimes I just need things explained in a way that a 5 year old can get it. This you did superbly, sir! Thank you!
Old but gold. Very well explained. Thank you❤
This was really helpful, I'm in college and I'm pretty interested in this. Potential career field for me. Thanks again
I calculated at 75k with 25% down @ 5.5% interest rate over 30 years is ALMOST 115k!!!!!!!!!!!!!!!!!!!!!!!!!!!
wow. it's nice to be a bank.
until the borrow defaults
ethan moore no, because then the government bails you out
It's real risky
@@ethanmoore3360 Wrong. The bank gets the whole house lol
Amazing video on the basics of mortgages. I'd like you to more of these since the banks clearly don't want you to know how this works. Also, that tax thing sucks didn't realize the government takes away so much. Our millennial generation needs to be taught this because of 2008 as seems like it is going to happen here in Canada if out notion is to buy without thought.
I want to thank you so much!!! I have been trying to understand all this process from many videos and mentors but you laid it out amazingly clear and understandable. You proved again that if the teacher is good, the student will get it. Thank you Khan! :)
i have doubt can uu reply
Your explanation always hits the mark....Good job
This video should have talked about the area under the curve in the graph. It's a wonderful visualization demonstrating how over the course of this particular thirty year mortgage the amount of interest paid is nearly as much as the loan principal.
something I think some people don't realize before getting a mortgage lmao. that compounded interest is killer !
This is wonderful. Thank you!
Thanks for the video! Very interesting concepts.
Thanks for the video. Can you PLEASE!!! Explain the Helper Variable?
Are there transcripts or actual captions for your videos? The Google automatic captioning does not work very well (give it a try, turn the sound off and see how much sense it makes). Deaf people are missing out on this resource. Thanks.
Very well done!
So helpful. Thank you so much!!
Thanks! Super helpful. Also am really shocked at how much banks make on interest every month. That's so sad
Very clear explanation
Watched many mortgage videos this is the best 👌
Thank you, this was very helpful as i am about to start working as a mortgage originator.
Thank you so much for this video!
This will be more than helpful for future, long term investments. Thanks for sharing this information! It's as if taking your time and diligently working hard will reward you greater over time.
Super helpful.
Nobody could have done it better!! Very well explained!
Thank you, very helpful.
Great info. Thanks for sharing.
Very-very well explained!!!
thanks for simple and clear explanation.
Informative and simple to understand 😊
Very helpful. Easy to understand. And practical real word knowledge.
I'm stuck at .46% of 375k I'm getting 1725. math ugggggggg
Nice video. Here in Romania the property title goes to you and you guarantee that you pay back the money with that house. I think it's better this way.
You are the best! Thanks
i like the drawing of that house
Thanks for the upload dude
Khan Academy Very thorough explanation. Thank you. Whether tax paid on mortgage interest can be offset against income tax is dependent on government policy.
Thank you so much Sal, you are the best.
Here at Rachael Loan Firm, our loan procurement and process is easy and quick.
We offer loans to private, public individuals and companies at an affordable interest rate of 2%.
We are also offering Christmas Loan, take care of your Christmas needs and pay back gradually next year. kindly contact us via laila.loanconsultant@gmail.com if you are interested and you'll be directed on how to get our services.
I trust Sal with my life
thank you!!!!
thanks for sharing, how can i find out how many properties you can own under one ssn in Delaware
awesome video thanks
very good information.
Thanks !
i love this guy
Very helpful got a like from me !
Mortgage = French for dead Pledge. (the promise pledge will die once paid off). Interesting word from mortuary and engage.
*HOW DO U CALCULATE 2129.21 payment HOW TELL MEEE? how to calculate monthly payment I have tried with formula its coming 1721 someting*
A mortgage is a loan used to purchase a house. It is secured by the property and allows the borrower access to funds to purchase the home. To understand your mortgage, you'll need to know the interest rate, fees, down payment, and loan type.
The origin of mortgage means until your death, you have this pledge. Like you said, the bank has security should anything happen to you.
Question: does the details of the mortgage the same globally(I'm in the UK)?
you could explain the Canadian Mortgage.
Can you PLEASE!!! Explain the Helper Variable? That is where the real math lies but alas, it is above my creative brains capacity. I really want to understand how you calculated the monthly payments and interest and all the math there of.
Good evening,
I am a private lender. I offer loans to people who have
need.
I do not take any fees in the Avence I say well I do not take any fees to the Avence
My interest rate is 2%, and I have to my credit € 35000000 available for
solve your financial problems.
If you are interested please contact me and let me know
the payment amount and the repayment period you have with
your loan. Here is my email: alexendraalex23@gmail.com
Khan, do you have an excel sheet or a way to calculate the exact amount of interest being paid after 30 years of mortgage payments? I would like to find out how much money I will be losing in the long run with a mortgage. I already downloaded your excel sheet here, but wondered if there was a quicker way of finding out the total interest payments in 30 years rather than calculating 360 months. =) if possible...
hlub1111 sum the interest column.
Only if I had access to loan !
What device was he using to write on?
Very helpful video, now how do i explain this to my wife in woman talk???
That's fucked up what you just said. You do realize half of the real estate agents are women
blognewb Don't feed the troll
Stop gold diggin' bitch
Don't Feed the Troll, Folks.
blognewb Yep. That's a problem.
So, if I get a rate from a lender, can I negotiate with that lender or I have to go find another lender and compare to see the best rate? 😑
Doesn't inflation also affect an adjustable rate mortgage?
Let's make an example to make things clear .
My ARM is initially 4% , but each year inflation increases by 150% .
So if at year 0 i was paying $2000 of intererest , at year 5 i am still paying $2000 but these $2000 became much less valuable due to inflation .
The present value of the $2000 at year 5 is 2000/(1+1.5)^5 = $20.5
So i am basically giving them the present value of $20 instead of the $2000 that i should give to them .
I know that i'm exageratting a lot since an inflation of 150% each year is very very high but this scenario actually took place many times in history so it's not unlikely to see it happen again.
The beauty of this for the bank is they create your loan out of thin air. And now you are going to pay them all that interest
It’s beautiful for bankers
And you never really own the house because you have to pay local grifter politicians property taxes double beautiful
I like the video! what software or program did you use to produce this?
Here at Rachael Loan Firm, our loan procurement and process is easy and quick.
We offer loans to private, public individuals and companies at an affordable interest rate of 2%.
We are also offering Christmas Loan, take care of your Christmas needs and pay back gradually next year. kindly contact us via laila.loanconsultant@gmail.com if you are interested and you'll be directed on how to get our services.
Good evening,
I am a private lender. I offer loans to people who have
need.
I do not take any fees in the Avence I say well I do not take any fees to the Avence
My interest rate is 2%, and I have to my credit € 35000000 available for
solve your financial problems.
If you are interested please contact me and let me know
the payment amount and the repayment period you have with
your loan. Here is my email: alexendraalex23@gmail.com
Nice vedio
hmm payment calculation? sounds like calculus. new goal to learn how before video
Lol that introduction music at 0:00
Om shanti om sai
Title should be the buyer's. The bank just put a mortgage lien on your property.
Here at Rachael Loan Firm, our loan procurement and process is easy and quick.
We offer loans to private, public individuals and companies at an affordable interest rate of 2%.
We are also offering Christmas Loan, take care of your Christmas needs and pay back gradually next year. kindly contact us via laila.loanconsultant@gmail.com if you are interested and you'll be directed on how to get our services.
one day Sal I'll repay you for all of that knowledge
Here at Rachael Loan Firm, our loan procurement and process is easy and quick.
We offer loans to private, public individuals and companies at an affordable interest rate of 2%.
We are also offering Christmas Loan, take care of your Christmas needs and pay back gradually next year. kindly contact us via laila.loanconsultant@gmail.com if you are interested and you'll be directed on how to get our services.
Taylor Swift is seriously the best artist out there right now!
What if you pay a down payment of more than 50% on the house? Does the bank still keep the title until you pay off what you owe them?
Yes, the bank will maintain the title until you pay off the entirety of the loan.
Scott Browne One other question. In the example in the video, the value of the house is 500K. What if the value of the house goes below what you owe to the bank? I would assume your equity goes to 0, but what else would happen in that scenario?
SuperFpac Yes, it is possible to have negative equity if the house's appraised value is less than the loan amount. This is a problem if you are trying to sell the house as this negative equity will become a realized loss but as long as you continue to make payments eventually you will own the house, just paying a lot more than its currently appraised value. Hopefully the value goes back up!
SuperFpac This is A. why one takes care of ones home...so the value increases, and B. why one tries to buy in a good, or upcoming neighborhood. If you buy when there is a bubble, or if the neighborhood goes down in a hurry or the house is neglected and rots, then soon you will be paying more than what the house is worth. But if the reverse is true, and everything is looking good, then you have a great deal because you (hopefully) paid little for a lot of value.
No wonder banks are so freaking rich...
In the example presented in the video above .. just come up with another $375,000 more and you own the house with no interest payments. But, you'll still have to pay the property taxes every year for the rest of your life. Or you can not buy a house and pay ever increasing rent for as long you live. Bottom line is that it cost money in one way or another for a place to live.
except some mortgage lenders have a pre-payment penalty if you pay off you mortgage early :( they want you to take your time so they make bank on that interest yo
Audio is low
They reach 2,000,000 subscribers
256th
Om shanti om namah
interest reduces taxable income
The bank gets a down payment of $125k and the guy pays his loan of $375K with interest after a certain period then what happens to the down payment?
The seller received the down payment ($500=$375+$125). As mentioned in the video, this amount is also the home buyer's equity. There is a column for this amount in the graph. Ideally, real estate doubles every 10 years. If this home buyer moved after 3 years, the hope is that this $500,000 home could be sold for $650,000 then. If so, the bank would receive its outstanding amount first (~$360,000) and the original home buyer (the new seller) would receive the remainder after closing costs.
First
they forgot to say..that you "never" own the house. Go see some Jordan Maxwell videos.. he breaks it down to real man terms.
What do you mean? Once you pay off the balance of the house you do own it. You will have the title. Besides property taxes you should not have to pay anything else to keep it.
What you unfortunately fail to mention here is that the money you lend is created out of thin air when it is credited to you.
The original French translation of mortgage 'dead pledge' needs to understood literally, it is a pledge to pay back a principal amount that gets created out of nothing being money that is backed by nothing tangible, plus interest to private financial institutions until you are dead.
Not exactly created out of thin air. If EVERYONE cashed out of the banks/stock market, all in one day, the banks would be finished! The public is just too stupid to do so. The public trust these institutions because its all they know. There is a technology called "crypto-currency" (Bitcoin) where people can now store all of their cash at home digitally and safely. Not much people know of this technology yet but very soon they will. (5-10 years)
Just like people didnt give a shit about the internet until facebook, google and youtube came around. People will start ditching the banks and going to "crypto currency" when the killer app is created.
I wouldnt be so pessimistic, the future is incredibly bright.
I don't think you understand what is going on correctly. The bank has the 375K. You have the 125K. You both have the money or else no one will sell you the house. Where did you get "thin air" from? Both the house and the money exists. The money the bank lends to you costs money, so you will have to pay it back with interest. Nothing is through thin air.
Willsturd They want to live in a fantasy. Reality is to harsh for some people.
ForceOfWizardry good point. Im curious though, is it worth it to switch to bitcoin atm? The value still seems to fluctuate a ridiculous amount, would everybody switching over to bitcoin from their banks at once be a good thing for the value of bitcoin, or bad?
+Willsturd do some research on fractional reserve banking and you might begin to understand the idea of thin air ;-)
Don't forget property taxes ;)
Not everyone pays them.
Anything that can't be universalized is of little use when talking about principles.
j
We’re also gonna securitize your loan and sell it.
On one hand you rent a place and you pay to some guy. At the end you're nobody. On the other hand you get a mortgage and pay to your bank all these interests for decades which will eventually cost you the place a double price from initial. However, at the end the place is yours. Also, you don't know what can happen to you during all those 30 year period of paying off mortgage. You can lose a job, get married and divorce, get sick and all other stuff. What if you decide to move? You're stuck with your mortgage.
Follow Wacky Mortgage Guy for free advice on what to do when searching for a home
It’s called a dead loan because you’ll pay it off untill you die .
the handwriting is barely legible
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