Not quite... banks store money, typically your money. When they make a loan they are lending out your money, along with thousands of other customers' money.
They can loan out more than they currently have, but it needs to be balanced against the amount they expect to receive in payments on said loans. Which is money coming from other people working and paying their mortgage.
Nowhere is money magically created, except maybe when the government prints it.
RE: People don't understand money. We really should. We really should try to explain it super simply.