When you arrange for a
mortgage
or other type of loan, you’re raising capital in the same way a company does when it takes a corporate loan. You’re investing in your future and expect that these loans will increase your financial worth in the same way a company takes on debt in the belief that it will help the business increase profits in the long term. You also believe that you’ll earn enough in the future to pay back the value of the loan as well as any interest.
The bank that lends you the money anticipates that you’ll use the capital in ways that will help your worth grow, and that you’ll be able to pay back the loan plus interest.
Lenders often have a type of insurance as well, in the sense that major loans are often secured. That means the bank has the right to repossess your home if you fail to make timely payments. It may also seize the assets of a company that
defaults
or revoke a line of credit if it feels the company is overextended.
Professor Samuel L. Hayes,
Harvard Business
School
Professor 
