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Leverage and Debt

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.”

worldlever

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.

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