[deleted]
A conundrum
Submitted 3 weeks ago by ickplant@lemmy.world to [deleted]
https://lemmy.world/pictrs/image/15e46ee1-78e0-4f48-b909-bd21d684306c.jpeg
Comments
fakeplastic@lemmy.dbzer0.com 3 weeks ago
ChicoSuave@lemmy.world 3 weeks ago
Covid was the wake up call I needed to realize that while I understand the nuance many others need the point made for them to understand the point of the scenario. We understand Eleanor. Some understand Callum.
BigBenis@lemmy.world 2 weeks ago
I’d wager a lot more than some need a Callum to explain what they should think about anything, given the state of things.
brognak@lemmy.dbzer0.com 3 weeks ago
And while we’re ranting about this, can we throw PMI and whomever came up with it on the bonfire where they belong?
Your telling me that I need to pay for you to have insurance in case I default while your also charging me interest who’s very purpose is to offset risk? Why am I paying to offset your risk FUCKING TWICE AND HOW IS THIS FUCKING LEGAL.
Shit infuriates me. I want all the bankers to get William Wallace on live TV, recorded and played back once a year during a mandatory viewing window so that we never, ever, forget.
outhouseperilous@lemmy.dbzer0.com 3 weeks ago
Its legal because value comes from ownership, not from doing things.
And if that sounds insane; you’re a fucking commie.
RagingRobot@lemmy.world 3 weeks ago
Also if you were to default they would take your house and get the insurance money
null_dot@lemmy.dbzer0.com 3 weeks ago
Interest is not intended to offset risk?
Interest provides a return on capital.
If you have $1 youre not using you might let someone else use it if they incentivise you by giving you an interest in their need.
If you give $1 to 100 different people you might increase the rate for some of them to offset your additional risk, but thats not the purpose of Interest.
brognak@lemmy.dbzer0.com 3 weeks ago
Part of interest calculation is risk. That’s why higher credit score leads to lower interest, it’s less of a risk to the lender.
PMI is double dipping. They can pick one, either a flat across the board interest rate for all borrowers or PMI.
Didn’t mean to imply it was entirely about risk.
OmegaMan@lemmings.world 2 weeks ago
This is one of the reasons my wife and I took so long to get a house. I refused to pay this absolute SCAM. So we saved up to put 20% down. What a crock.
FosterMolasses@leminal.space 2 weeks ago
Shit infuriates me. I want all the bankers to get William Wallace on live TV
Thanks for the hearty laugh
JasonDJ@lemmy.zip 3 weeks ago
The alternative would probably be (much) higher interest rates until you get below 80% LTV at which point you’re “allowed” to refinance…but no bank will ever remind you of this in hopes you forget…or prime will skyrocket and you’ll be stuck in high interest for an unknown amount of time.
I think you should put away the monkey paw before they get more inspiration.
Kolanaki@pawb.social 3 weeks ago
“The apartment is $1300 a month.”
“Perfect, I make $2000 a month.”
“No. You’re gonna need to make $3900 a month before we will rent to you.”
But_my_mom_says_im_cool@lemmy.world 2 weeks ago
I live in the Toronto area and rent here is up to like $2600 for a 2 bedroom. Why haven’t we burned shit down? Why do we take this??
Im no leader but I’ll gladly build some gallows and die for my kid’s generation. Im also a vegetarian, but I’m willing to roast and take a bite of the billionaire just to show my conviction. I think we should actually literally do it with one to prove a point
Furbag@lemmy.world 2 weeks ago
Yeah, the 3x salary requirements are insane when housing accounts for almost 50% of people’s take home pay in most places.
Paddzr@lemmy.world 2 weeks ago
3x rent is pre tax, 50% is after tax.
Just a small clarification.
merc@sh.itjust.works 2 weeks ago
There’s a rule of thumb that your rent / mortgage payments should only be 1/3 of your pre-tax pay. In expensive cities that’s sometimes impossible to manage. But $1300 out of $2000 means you’re spending 2/3 of your pre-tax pay on housing. If you’re taxed at only 20% that means your take-home pay is going to be $1600. After rent you’d only have $300 a month for food, utilities, clothing, transportation, etc.
If I were a landlord and someone on $2000/month wanted a $1300/month apartment, I’d be asking questions too.
PeriodicallyPedantic@lemmy.ca 2 weeks ago
you’re not gonna be able to afford this apartment after a few years of 10% rent increases, and we don’t want the inconvenience of evicting you when that time comes
ZombiFrancis@sh.itjust.works 3 weeks ago
They don’t actually need regular payments for 10-30 years. They need you deposit that down payment cash ASAP so they can lease it to billionaires and crypto exchanges.
LodeMike@lemmy.today 3 weeks ago
The deposit is to cover expenses/losses that arise out of defaults. Housing loans have been lile this forever. Not everything is a conspiracy.
gandalf_der_12te@discuss.tchncs.de 3 weeks ago
the deposit is the keep young, inexperienced and glowy-eyes people from making commitments they don’t have the stamina to handle.
it happens a lot that 20 year olds want to buy a house with their new partner that they think they’re gonna be together with for the rest of their lives, only to have it all fall apart 5 years later. forcing to you save up a bit before actually buying the house means you go through a lot of experiences before you actually buy a house, which makes it more likely that you’ll have the far-sightedness that’s needed to actually buy a house.
null_dot@lemmy.dbzer0.com 3 weeks ago
Idiocy.
The bank doesn’t get the down payment. The person selling the house does.
You pay that person the down payment, and the bank pays them the rest.
Honestly there’s loads of great reasons to hate banks but lots keep it real and avoid making up nonsense.
ZombiFrancis@sh.itjust.works 3 weeks ago
Banks typically ask for you to have cash in hand (deposited), or equivalent leverage, to qualify for loans in the first place.
The bank I used actively tried to get me to go with less down payment, and subsequently take out a larger loan.
But yes it is the height of idiocy to say, ‘down payment deposit’ when ‘qualifying assets’ is a more accurate term for the transactions function.
gandalf_der_12te@discuss.tchncs.de 3 weeks ago
Actually i guess the bigger issue is that we’re gonna be unemployed in 15 years and then who pays back what?
outhouseperilous@lemmy.dbzer0.com 3 weeks ago
Right? You don’t need to exist long term. Fuck off and die, meat.
Nalivai@lemmy.world 3 weeks ago
There is no declining demand of human labour, and there is no indication that it will ever happen. The way the labour is performed is changing
smh@slrpnk.net 3 weeks ago
Joke’s on them, I have a 15-year mortgage on my condo. (Lower interest rate than a 30-year mortgage, USA, ymmv)
NENathaniel@lemmy.ca 3 weeks ago
Where y’all finding houses for 500/month with a 25k downpayment?
Seems cheap af. If you only did a 25k downpayment the mortgage would certainly be more expensive than rent where I’m at.
tfw_no_toiletpaper@lemmy.world 3 weeks ago
There will be shitholes in bum fuck nowhere but in this area rent will not be 1k lol
Blackmist@feddit.uk 3 weeks ago
My house was cheap in a shit area (like knuckle draggers shouting at hotels shit) and that cost me £800 a month 20 years ago.
And that was with a massive deposit. Still, paid that shit off now.
beveradb@sh.itjust.works 3 weeks ago
I bought a 2 bedroom single family home in South Carolina last year for $86k with only $11k down, 7 minute drive from the city center of the capital city (Columbia). Mortgage is $480/mo. Cheap houses absolutely still exist if you’re willing to live in areas where “nobody wants to live”
TipsyMcGee@lemmy.dbzer0.com 3 weeks ago
Would have been standard fare in Sweden until recently, but that’s obviously an outlier
MystikIncarnate@lemmy.ca 2 weeks ago
I went from an apartment that cost ~$1250/mo. To a mortgage that costs ~$4300/mo. Just got the “privilege” of owning a home (and paying for all repairs myself).
I can only afford this because of the people I’m sharing that cost with. We’re all on the deed, and we all have a stake, and claim to, the house. Four of us.
My payment didn’t really change.
The only way we could get to the point of a down payment is that one of the four of us has been saving for something like this since they were in highschool. Because of their effort, we had enough for a down payment.
And I’m lucky to be in this position.
What a fucking crock of shit.
Despite all of this, I’m hoping the market takes a dive so the rest of you can do the same at a much more affordable rate. I’ve already spent the money and I’ll be spending years paying it off. I didn’t buy a house up objectively save money, I bought a house for stability. I never want to move ever again. There are good reasons for that which I won’t get into. I promise that I will have ZERO issues if you all get a better deal than I did. I hope you do, and I hope the housing market, specifically the rental/flipping/“income property” markets crash, hard.
In the same way, I’ve paid off my school debt, I’m in favor of school debt forgiveness. I also enjoy pretty good health, I’m in favor of universal healthcare. I’ve never caused, not been the victim of a fire, I’m in favor of fire departments.
I could go on.
Good luck everyone.
prole@lemmy.blahaj.zone 2 weeks ago
In the same way, I’ve paid off my school debt, I’m in favor of school debt forgiveness. I also enjoy pretty good health, I’m in favor of universal healthcare. I’ve never caused, not been the victim of a fire, I’m in favor of fire departments.
That’s commie talk
MystikIncarnate@lemmy.ca 2 weeks ago
I’m glad I don’t live in America then.
billwashere@lemmy.world 2 weeks ago
Damn $4300 a month. I thought my $2600 was steep.
Right before we moved my rent had gone up to $2500 so it was a push. Now when we first started living there the rent was $1400 and the landlord had even refied so his mortgage was cheaper at the end. When we were moving up and he drove up in a brand new Rivian that I’m pretty sure I basically paid for…
MystikIncarnate@lemmy.ca 2 weeks ago
To be fair, it’s a pretty large home. I’m living with my SO, my brother and his wife and there’s a couple of offspring that needed space too. Our house has ~5 ish bedrooms. Considering the number of people who live here, it can feel small. If it was just me and my SO, this would be humungous.
But that also means that we have four fully grown adults helping with the mortgage. So my share of the mortgage is around $1100 ish, per month, and we split most of the household bills, so I usually throw in about $400 more to help with that. I personally pay about $1500/mo.
My SO does the same, and we’ve encouraged my brother and his wife to also do the same. If everyone pays $1500 towards the house every month, we have more than enough to cover all the bills (electric/gas/water), as well as shared things like the Internet. Also that’s enough to cover the house insurance.
AdolfSchmitler@lemmy.world 2 weeks ago
Yeah, I went from $1200 rent to a $1300 mortgage but the city added $50k more value to the assesment so between taxes and insurance it’s going up to $1700/mo next year so that’s fun. I don’t know how many more years of that I could afford cuz $2600 just isn’t doable for me :/
Cocopanda@lemmy.world 3 weeks ago
Going to be wild when people just give up on society and just start eating the ruling and ownership class. I tried warning these assholes if they didn’t give something. Then they would doom their existence. And now you have more people radicalizing everyday because they are being put on the streets.
PeriodicallyPedantic@lemmy.ca 2 weeks ago
The first time I applied for a loan, I didn’t have a credit card yet. And they were like:
How can we know you’re responsible with money?
Because I haven’t needed credit in the past and I’m still alive, idk? Having enough liquidity to not need credit would seem to suggest I’m good with money.
But maybe your parents are paying for everything
Ok? How does using a credit card change that?
bunchberry@lemmy.world 2 weeks ago
They are NOT looking to see if you are responsible with money. They are looking to see if they can make money off of you, so they want you to be a heavy credit user. Before I bought my house I made sure to take out two credit cards and just buy random shit on them for a few months because that boosts my credit score drastically which then made it easy to get the loan.
JoeBigelow@lemmy.ca 2 weeks ago
Because people that quickly pay off their principal and avoid accruing interest don’t make the Credit Card companies as much money. They prefer people that are bad with money, sort of like how police departments don’t accept applicants that do too well on the tests.
PeriodicallyPedantic@lemmy.ca 2 weeks ago
That’s the impression I get too
But it’s plausibly deniable enough because you can still get decent credit score if you pay off your credit before you pay interest. It’s a numbers game for them, I expect, but still.
filcuk@lemmy.zip 2 weeks ago
Considering how much data they can get on anyone, this process seems pointless and outdated, except to give them somewhat arbitrary power over who can get a loan.
Not that I like such private data to be available at any institutions fingertips, but so it is these days.
big_slap@lemmy.world 3 weeks ago
otacon239@lemmy.world 3 weeks ago
Well shoot. Why wasn’t this the case from the start? I’ve only ever had troubles with payments a few times in the 10 years I’ve been renting. Good thing none of that counts for anything and the clock is just now starting.
onslaught545@lemmy.zip 3 weeks ago
There used to be a service called Williams Paid that would act as a middle man to pay your rent, then report it on your credit.
FireRetardant@lemmy.world 3 weeks ago
To be the devil’s advocate here. Rental payments vs mortgage payments is not an accurate comparison of the true financial burdens.
With many rentals some if not all utilities are included in the price of rent, whereas homeowners must pay the full cost of utilities. There is also the additional cost of home insurance and property taxes. Most rentals have the majority of their maintaince covered whereas the homeowner is responsible for lawn cutting, gutter cleanings etc. The cost of repairs and maintaince is not negligible. While renting if the heat quits or an appliance breaks, the landlord is supposed to cover the cost but owning means you must take that full cost.
In the posted example, having double the mortage payment in rent payment is probably adequate to cover the additonal costs but the comparison of renting vs owning is not black and white. Several financial managers have even studied that depending on your needs and income, you can actually be getting ahead financially by renting if you don’t actually need the full benefits of owning and are able to maintain a store of wealth through other investments. This is especially true if you are in a rent controlled unit.
HugeNerd@lemmy.ca 2 weeks ago
The corrosive corollary to ever-rising real estate valuations is that there is no incentive to keep buildings like condos nice or neighborhoods clean, someone will buy at the inflated price anyway since they all are inflated.
So basically I feel in Canada we live in a system that pulls valuation out of thin air, produces nothing, incentivizes no one, yet allows everything.
PapaStevesy@lemmy.world 3 weeks ago
I hate to break it to you, but mortgage payments are not cheaper then rent anymore. Obviously depends on your mortgage and money down and all that, but if you expect to pay half as much for mortgage payments as you did for rent, you’re going to have a very bad time.
Ibaudia@lemmy.world 2 weeks ago
My issue wasn’t getting pre-approved, it was being able to actually afford the mortgage amount I was pre-approved for. A lot of these companies don’t give a damn if you can actually afford the mortgages they offer, because they know you’ll either figure it out or go homeless trying.
ivanafterall@lemmy.world 2 weeks ago
I saved up a big (to me) chunk a few years ago, thought I was there. Expected the red carpet to roll out. Nooooope. There were people buying houses for $100k more than the asking price, sight unseen, within a week or two of the house being listed. My little $40k deposit was adorable, in comparison. I had no chance. Then Covid, life, etc…
null_dot@lemmy.dbzer0.com 3 weeks ago
The deposit is not to prove you can make the repayments.
Housing markets do, occasionally, go backwards in value.
If you have a loan for a house which is more than the value of the house you would have an incentive to just stop paying.
Thats why the bank needs a buffer, in the form of a deposit. Its not really nefarious.
workerONE@lemmy.world 3 weeks ago
People don’t want to twerk anymore!
altphoto@lemmy.today 3 weeks ago
Suppose I was the bank…
Guy1) Hey bank I want to sell my house for $1,000,000.00. Here is the deed, I owe $999,999.00 bank2.Bank1) OK I’ll take the house, here is $1.00 and $999,999.00 for bank2. Did you fuck up the house or burn it down to the point I can’t sell it?
Guy1) yup to the ground I burnt it all.
Assessor) I’ll charge Bank 1 $300 to go asses the price. Yeah currently this property can be sold for $300,546.00.
Bank 1) OK Guy1, you owe Bank2 $699,454.00 but here’s your $1.00.
Guy1) your honor I need to file for chapter 11. I have no money
Guy2) Bank 1, I would like to buy this property.
Bank1) Sure that’ll be $1,000,000.00.
MudMan@fedia.io 3 weeks ago
Yeeeeah, I was too adult in 2008 to go "you know the real problem? We check too hard for solvency when giving out mortgages".
Not that I have a silver bullet for solving a housing crisis. There probably isn't one. You need a lot more public housing as a percentage of the total pool, that much I can tell. How you fix a job market where nobody holds the same position for more than a handful of years is beyond me. You probbly need to make it much more expensive to own a house without living in it or renting it out. You definitely want to make it much more expensive for corporations to own housing.
Guessing that's harder to fit in a pithy, viralt tweet, though.
Noite_Etion@lemmy.world 3 weeks ago
Come back with some inheritance and then we will talk.
LoafedBurrito@lemmy.world 2 weeks ago
You can’t even get an apartment here without making a ton of money. Cheapest studio apartment here is $1,500 a month. I have to prove i make $4,500 a month just to barely qualify, which i don’t. Then they charge you so much for application fees, and then utilities they overcharge for, it’s all a scam.
4am@lemmy.zip 3 weeks ago
An ancient conundrum of you think anyone’s mortgage payment is £500, in any country
commie@lemmy.dbzer0.com 3 weeks ago
I know a lot of you are urbanites, but for anyone who isn’t, check out the USDA 502 direct loan program
betterdeadthanreddit@lemmy.world 3 weeks ago
The problem here is inability to read between the lines. The [bank?]'s message is pretty clear: “Stop polluting my sight, you filthy poor.”
mrregina@lemmy.world 3 weeks ago
Yeah saving the money to buy a house is terrible.
Korhaka@sopuli.xyz 3 weeks ago
How fucking old is this? Unless it’s a real shithole, mortgages have not been this cheap since Truss fucked up the economy
technocrit@lemmy.dbzer0.com 2 weeks ago
“Landlords” are probably one of the oldest grifts in the book.
sirico@feddit.uk 3 weeks ago
They did this before it worked out really well around 2008
Tall_Chilchuck@lemmy.world 3 weeks ago
I’ve never paid a mortgage, but £500 seems pretty low. Do mortgage payments tend to be that much cheaper than rent prices?
jubilationtcornpone@sh.itjust.works 3 weeks ago
Then there’s all the expenses you didn’t know about before you bought the house. If you don’t have at least some DIY skills, you get to pay people a lot of money to fix things for you.
…BTW, the county just did a reassessment on your property and your property taxes have now doubled. In exchange, you get nothing. Congratulations.
Lemmyoutofhere@lemmy.ca 3 weeks ago
Yup. Oops, you need a new roof and a water heater, that will be $34,000.
HeyJoe@lemmy.world 3 weeks ago
Hey, I just did these things! Water heater i was ripped off, which cost me $2600, and the roof i actually thought was a good deal at 17k. Not fun but the roof made me happy. The water heater actually destroyed my basement by leaking out…
onslaught545@lemmy.zip 3 weeks ago
I wouldn’t say you get nothing from paying property taxes.
rc__buggy@sh.itjust.works 3 weeks ago
That’s true but when they double over 10 years and four schools in the area shut down due to “lack of enrollment”? Streets sure aren’t any better and my neighbor who works for the city has only had COL raises for the same past decade?
c’mon… something is going on.
Comrade_Spood@slrpnk.net 3 weeks ago
Depends where you live. Where I live we just get more funded cops to more expensively harass houseless people.
arrow74@lemmy.zip 3 weeks ago
I always find this to be such a poor argument.
Yes unexpected maintenance can sometimes be a huge problem, especially in the first couple of years, but after that you can tap into home equity and repair say a roof. Everything else while expensive is still cheaper than renting. Using the OP’s example 1k vs 500, I can assure you you will never have consistent 500 repairs per month.
As for the taxes my city nearly went ballistic when the city increase the rate by 5%. At the end of the year it costed me $200. Per month that’s about $16. I’ve never lived in any apartment anywhere where rent didn’t increase by at least $50 per month each year. Even if someone had a home twice as valuable that’s still a very small monthly cost.
Additional once you get past the first 3ish years rent prices have greatly outpaced your mortgage and you will be saving a lot of money compared to of you were renting.
I’d like to wrap up with a question. If owning a home was such a sink of resources why do people become landlords?
Blue_Morpho@lemmy.world 2 weeks ago
There’s no, “tapping into home equity.” There’s only extending the mortgage with more debt.
20 years ago my sister did all sorts of home improvements that she said were free because she was “tapping into equity”. Now she’s nearing retirement and complains she still has giant mortgage payments.
KnightontheSun@sh.itjust.works 3 weeks ago
Speaking to the post, I feel like there is a tipping point between OP and your points and the post is showing that. If you can convince the bank to loan you the money somehow you then start to build more capital which can pull you out of being “poor”. There are many variables and wildly varying degrees of this scenario, but once you start your ownership experience, some people can work it quite hard and build enough capital to own multiple residences and rent them out. (Those already in possession of capital are out of scope of OPs post.)
Rent is paying the landlord for everything every month. No repairs lately? Too bad, you’ll still pay for the possibility. The exchange is that you should never worry about repairs (or taxes) as the landlord handles everything. Once the landlord figures his margins are too tight, they raise the rent. Lots of variables here too and that makes blanket statements about which is better more difficult. I advocate home ownership, but I feel terrible for young people. Runaway greed by those that already had the capital has changed things. The young folks I know that are able to manage it all had help from relatives.
The act of convincing the bank and owning a home is getting more and more difficult. Impossible in many places and improbable in others without Herculean efforts. OPs post expresses this perspective.
rc__buggy@sh.itjust.works 3 weeks ago
I tell my soon-to-leave-the-nest kids:
Rent is the most you will pay every month. The mortgage is the least you will pay every month.
I’m loving them being here as full grown adults and enjoy my time with them and with our particular house they are seeing that lesson play out in real time. Some big expenses and I am the DIY dude. I don’t fuck with (big) electric or gas though, that shit can really backfire.
The_v@lemmy.world 3 weeks ago
Rent vs mortgage - gotta put a caveat on that one.
Renting = landlord gets all the money but has to maintain the property.
Mortgage - bank gets all the money and you get a partial refund if you sell. You pay for the upkeep. A mortgage is not really an “investment”, you usually lose money on the deal if you live there. It’s cheap rent from the bank.
It basic math to see which one is better long term. Usually the mortgage wins because of of the partial return. However if you can’t do the upkeep yourself, renting is often a better financial decision.
There have been times when renting was the smarter financial decision. Like the housing bubble in 2003-2007. You could rent places for 1/2 what it would cost to buy them per month.
prettybunnys@sh.itjust.works 3 weeks ago
The other side of that is that my mortgage, even with rising property taxes and my house appreciating wildly in value, tracks less than renting.
If I could rent a place for the price of my mortgage with the cost rising at the level my mortgage does … I’d rent all day long
Bgugi@lemmy.world 3 weeks ago
That decision is true today, but realistically your rent will grow much faster than your mortgage (plus escrow) payment, and your mortgage payment goes away.
UnderpantsWeevil@lemmy.world 3 weeks ago
The cost of owning is significantly less than renting over the life of the unit. Repairs happen, but most of the time they aren’t time critical, so you can budget out the repairs over months.
Idk where you live, but most states limit the rate at which an acessor can raise your housing price. In Texas, the cap is 10%. So your property taxes can rise, but the won’t double overnight.
You can also contest the increase. Harris has been fairly receptive to a simple “my neighbor’s house sold for X so my house should be worth about X, not X+20%”
FireRetardant@lemmy.world 3 weeks ago
The cost of owning vs renting can be very different depending on where you live and work and the amenities you want access to. Renting somewhere centrally located with good access to high quality transit and other amenities would likely be cheaper than owning. Unless we can start normalizing owning apartments again. You could own for cheaper on the outskirts of downtown, but you’ll likely be sacraficing access to some amenities by doing so.
Clent@lemmy.dbzer0.com 2 weeks ago
Also, the 500 is just the mortgage payment. It doesn’t include the insurance and property taxes and, at least in the USA, private-mortgage-insurance (pmi) if the down payment isn’t at least 20%.
The monthly obligation can easily be more than that 1000. The savings is in locking the first half in at a set amount.