An elderly woman named Mrs. Gable owned the house. She had bought it 20 years ago for . Over time, she paid off most of her mortgage. The difference between what the house was worth today ($250,000) and what she still owed the bank ($50,000) was her equity ($200,000). Equity is the owner’s true wealth in the property.
Enter Leo, a young graphic designer. Leo had saved $27,500 for a down payment (10% of $275,000). He couldn’t pay the rest in cash, so he went to a bank. como funciona el real estate
Leo’s down payment of $27,500 gave him control of a $275,000 asset. That’s —using a little of his own money and a lot of the bank’s money to own something big. An elderly woman named Mrs