Most people think they understand how mortgages work — you borrow money from a bank, buy a house, and pay it back with interest. Simple, right?
Not quite.
In this episode, Paul dives deep into what really happens when you take out a mortgage — and discovers that the story isn’t nearly as straightforward as we’ve all been told. Together with AI, he unpacks the mechanics of modern banking: how money is actually created, what securitization really means, and how banks turn your mortgage promise into bonds sold on global markets.
You’ll hear a curious back-and-forth that reveals surprising truths about where the money really comes from when you buy a home, how banks manage risk, and why the housing market’s health is so deeply tied to the financial system’s stability.
If you’ve ever wondered, “Does my bank really lend me money — or just create it?” — this episode is for you.
🎙️ Hosted by Paul at Talking to AI — where real people, real problems, and real conversations meet artificial intelligence.
🍱🥡🍔 My takeaway
Banks do lend you there money. When you buy a house with a mortgage the bank is in effect paying you for a bond (which is the house). They then own the house and you will own it once you have paid the debt in full faliure to pay the debt result in the bank forclosing and taking the house. Where it get complicated is that once that transaction is complete the bank then creates a bond based on your promise to pay the mortgage. The bank then sells that. The bank now has the house and the money – Good gig if you can get it!