From the course: Real Estate Analysis Foundations
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Impact of debt summary - Microsoft Excel Tutorial
From the course: Real Estate Analysis Foundations
Impact of debt summary
- [Instructor] In this lecture we're going to do a too long, didn't 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. Now 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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