Buying a Home (Mortgages)
01.A Very Big Purchase
Houses cost a lot of money—often hundreds of thousands of dollars! Almost nobody has that much cash sitting in a piggy bank. That's why people use a special type of loan called a mortgage to buy a home.
02.The Down Payment and the Loan
To buy a house, a family first saves up a portion of the price in cash, called a down payment (usually 10% or 20%). The bank lends them the rest of the money to buy the house. The family then pays the bank back every month for 15 or 30 years, plus interest.
03.Building Equity
Every time a family makes a mortgage payment, they own a little bit more of the house. This ownership share is called equity. Over time, as the house increases in value, the family's wealth grows! This makes buying a home a powerful part of long-term planning.