From the course: Pre-investing: Before Investing in Real Estate
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Debt leverage summary - Microsoft Excel Tutorial
From the course: Pre-investing: Before Investing in Real Estate
Debt leverage summary
- [Instructor] In this lecture, we're going to do a too long did and watch summary of the impact of debt. Now, before we get into that, let's review what every single loan will have in common. First, every single loan will have a principal amount, or the amount that you're borrowing. So if you're borrowing $70,000 for a $100,000 home, then your principal amount will be $70,000. Next, every single loan will have an interest rate, or the cost of borrowing. It's going to cost you some amount of money in order to borrow it. That's how banks make their money, or how other investors who want to make loans to other investors could make money as well. So there will always be an interest rate. Third, is every loan will have a loan term. There's going to be at some point where you're going to have to pay back all of the loan that is due, or all of the principal that is still outstanding, as well as any interest that may have accrued during that time. One distinction that separates some loans…
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