How Banks Make Money From Home Loans

How Banks Make Money From Home Loans is explained right here in this infographic from Tomorrow Finance. We are even given the outstanding figure of $13.4 trillion of outstanding mortgage debt.

What the Frac?

How banks make money from home loans.

Fractional Reserve Banking refers to a banking system which requires the commercial banks to keep only a portion of the money deposited with them as reserves. The bank pays interest on all deposits made by its customers and uses the deposited money to make new loans.

This design does a good job of showing the audience the scale of the amount of money involved.  Each $100 stack of bills is carefully used to visualize the amount of money being used in the explanation, and it makes a bigger impact by making it visual.

The sources are carefully documented and all of the visualizations appear to match the numerical values.  At the bottom should be some type of copyright or Creative Commons statement, and the text URL back to the original infographic to help readers find the high-resolution version when they see posts of this on other sites.

The designer here did a really good job of telling a simple, focused story in the the infographic that is quick and easy for readers to understand.

Comments

[Jsam]

I don't like this one at all. Nothing in the steps show the banks making home loans, or making money from home loans as the title says. The second and third steps don't make sense - why would Jane borrow money from bank A only to deposit it in bank B?

[Medical Service]

great blog. thanks for sharing,....

[Art Pinto]

Banks are businesses and as all businesses, they want and need to make money. Whether we like it or not is not the point. Shopping rates, doing your research and reading about it will help you more than just complain about it.

Art Pinto
www.decorativeconcrete.com

[g]

Silly Q's. What does the "x20" refer to in farm mortgages? And the subtle inclusion of a balloon is brilliant, but why no other reference?

[Home Loan Deals]

I really like this great home loans information and thanks for sharing this really nice blog. Appreciative piece of work.

[King]

This is very informative! I never knew how this works and the pic breaks it down.

[How To Earn Money From Home]

I like this app and I look take to your future posts on further development. Good luck!

[WhiteLoans]

Very nice infographic - thanks for sharing. Banks obviously make more money for the LONGER TERM home loans, which is why it's now not uncommon for them to spread your loan over (say) a 35-40 year term. The banks spin this by saying that they're providing a "better overall service to the customer" when in reality they're making 20% more income over the lifetime of the loan :-(

[NJ FHA]

Excellent post. I learned a lot.

[Jesse Janellastaud]

Just remember that the bank does not want your run down home. They want interest and money. Most banks nowadays are much better than they were with their lending practices ten years ago. Try researching and using a bank that did not require a government bailout in the last fifteen years. You'd be surprised to know that good lending practices still exist and any bank that did not require outside help to maintain stability is a sure sign of a good lender right there. Thank you!

[37 Property Group]

Awesome post! Really informative.

[homes for sale in Fall River NS]

Banks always take advantage, of home loans. But on other hand they provide loans to many people, and they fulfill the dreams of people who want to buy their, new home. Now days when a home buyer buys a home, from real estate agents, they easily provide home loans.

[Samuel lee]

Excellent post and I love the way the information have been represented. Even the person can understand the whole process within one page scroll. There's no doubt that banks are business as they are giving us the money, taking security of our money, etc.. so they will charge us for the services.

[Accurate Mortgage]

Banks earn millions, billions, trillions from home loan, but anyway i am also interested to apply for a home loan. :") thanks for this very informative detailed article. :)

[Henry Jacob]

A very informative post. Thanks a lot for sharing this. Good Work. Keep it Up.

[tanisha]

great blog ..

[Tamanna]

Nice post

[Home Loan]

Banks make money from Home loan , but they also give you money to buy home or property for you. So in replace of money they take money with interest through which they make business.

[logintoloans]

Nice article about Home Loan. I like the way you are telling clear information about Home Loan.