January 13, 2020 at 05:29PM

I have this question that’s been bothering me. Let’s keep it simple. A building costs $100 to build. The bank says they will fund 100% of these construction costs. Additionally, the interest to be paid on this money is estimated at $5. The question is, why would the bank offer to fund $105 for this project, thus funding the interest that the borrower would have otherwise given to the bank out-of-pocket? Ignoring all else (fees collected, etc.), how does the Bank make money funding their own interest payments?

submitted by /u/Redsox3591
[link] [comments] via Savings, Checkings, CDs, oh my! http://bit.ly/2tV3tst

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s