In financial terms, leverage acts as a multiplier. It allows an individual to purchase or invest in more by borrowing. In the mechanical world, leverage can produce powerful effects. Archimedes once said, “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.”
In terms of a home mortgage, envision that your monthly payments as the small force being applied to one end of a lever. That small amount of cash can produce enough lift (cash from the bank) to purchase your home.