Or does the $900 they lent create a -$900 for the bank that is cancelled through repayment?

Correct (effectively). Remember how you are "loaning" money to the bank by depositing money in ur bank account? Think about it - if someone loaned you money, and you spent it somewhere, would you have 0 money or would you have negative money (in terms of cash)?

Interestingly, this is why Nordic countries technically have one of the highest wealth inequalities in the world. It's because they easily get home loans as the government acts as their guarantors. Here's a vid to explain this.

Holy shit. I get it! That's a great explanation and I really appreciate your taking the time to type it all out. I'm glad we don't have Lemmy medallions to award but, if we did, I'd give you one.

Awwww thankssss