live on the interest payments.

The loan carries 5.5 interest.

I was a little behind in my loan payments.

The loan bears an 8 interest.

He paid the loan with interest.

This loan will carry very heavy interest.

How many payments will it take to pay off this loan?

She paid seven percent interest on the loan.

And then the investors are going to get my interest payments.

They made sure that their loan recipients were staying up with their payments.

And when the 1 billion came from that local bank, all the payments, the interest payments, went to the bank.

loan, so, maybe, 580,000 if they were only paying interest.

My bonus doesn't come close to covering all the loan payments I have to make.

You can also take an interest only loan, but the component of the interest is the same.

What does that do to the payments and to the interest rates and so forth?

So essentially, instead of Countrywide being responsible for my loan, my payments now go to these investors.

Remember, this is the annual interest rate but this is an overnight loan.

So you're essentially taking the present value of your payments and once again, you get your loan amount.

And the payments?

A bank says, OK, sure, I'll give you a 500,000 home equity loan, and in exchange, get 8 interest on that loan.

Because if you normally pay the payments every month, the interest normally compounds on a monthly basis.

It'll have some interest rate, let me make something up, maybe it's a 7 loan.

You're guaranteed these payments.

They defer the payments.

And now instead of you getting the payments, I get the payments.

And this bank says, well you know, I just handed out 1 billion and I'm getting these interest payments.

They have the value of the interest payments, plus eventually, they're going to pay you the 10 billion back.

So zero coupon essentially means they're not paying interest until they pay off the whole loan.

loan, because this isn't a traditional loan, an interest only loan but for the sake of this presentation, how it's different than a mortgage backed security, the important thing to realize is that the bank would have kept the loan.

Number of payments per year

These payments are spread out.

So the 10 is the interest payments plus what they're going to pay you back, which might be 9.9 billion.

So if I take a loan from someone, I owe them interest, or I have to pay them back the actual value of the loan one day.

So all of these are payments.

You don't pay any mortgage payments.

Your insurance payments didn't go through.

But in general, hopefully, I've shown to you that we can write the loan amount as the present value of all of the payments.

Because this 500,000 loan is not an unsecured loan.

And this new loan is the most senior loan.

Of that 100 million in payments, 6 on the 400 million, that's 24 million in payments.

Some of which is interest, some of which is principle, but it's the same amount you're going to pay every month to pay down that loan plus interest.

Can a bank just continue issuing loans and checking accounts indefinitely and essentially collecting the difference in the interest between the interest it gets on the loan and the interest it gives on the checking account?

So 900 loan.

Whose loan out?

Let's say this loan, the loan from Bank B to