Not OP, but the normalization of something necessary requiring to borrow a lump sum and take 20-30+ years to pay off plus interest. Even the valuation of homes is ridiculous in itself, since those numbers are somewhat based on subjective values or "how much can I get away with charging?". Sure, you have a baseline of materials and labor but the subjective part is just what's around that property. Even if you lived in a shed and someone builds a mansion next door, now your value magically goes up? It's a gimmick that only further drives inflation with fluff being added to demand. The shift of practically all US housing markets from the pandemic (people changing employment, vacancies created from those who died) went into a boom because companies or those with extra money started buying the excess supply so fast that it inflated demand. I'll stop ranting but I think it's all ridiculous and unsustainable and would like to mention that renting is just a subscription of residence.
But what's the alternative? Houses are going to be expensive no matter what. I only paid 100k for mine which is relatively cheap for a house but I still couldn't have afforded to buy it without taking a loan. My friends are now paying higher rent than I pay off my mortage every month. After 15 years or so I no longer need to pay the mortage AND I have a house I can sell but my friends are still paying rent and have nothing to show for it.
This is unfortunately a fallacy. Those paying rent don’t have nothing to show for it — they pay for a roof over their head. So do you with your mortgage. At the end of your mortgage term, yes, you have an asset that those paying rent don’t, but you also had to drop a large sum of money upfront that they didn’t. Theoretically they were able to invest that money you paid into other assets that may or may not have appreciated more over that same period of time. Additionally, renters are often much more able to move should their living circumstances change.
At the end, you both pay for shelter for a period of time. And yes the argument is largely theoretical and vastly dependent on external factors, but it’s not true that owning is always better than renting.
(I say this all as a homeowner as well, FWIW).
A mortgage where, for instance, 90% of each payment goes to repaying the capital of the mortgage, and 10% to the interest. There's no way it's fair that you should need to pay 2x the value of your house over 25 years.
But why would anyone lend you money for free? What's in it for them?
That's not free. That's just a less predatory rate of return.
I would further suggest that there is a hard cap on the interest which can be charged on any borrowing.
But if I'm a lender and I have spare money to invest I can always just put it into the stock market where I'm on average getting a 7% yearly return. It only makes sense to lend that money to an individual if I'm getting a better rate. Otherwise I'm just losing money.
Then someone else will take that lender's place. Mortgage lending will, at whatever percentage, produce a stable rate of return. If anything, preventing exorbitant interest rates mitigates much of the risk involved in lending.
Then someone else will take that lender’s place.
Why would anyone do that when they get better return for their money elsewhere? You're basically expecting people to do charity or simply just be incompetent and make bad financial decisions thus effectively making you the scammer.
Hardly. The market still exists, and lenders can still make a profit, just maybe not as much. It's not rocket science.
That's merely a desire for a more "fair" system or frankly just something that benefits you rather than someone else. The discussion here is about scams and my argument is that mortage is not one.
You asked for an alternative and I gave you one. You just aren't happy at the idea that massive lenders can afford to make less.
And of course I'm motivated that it benefits me, and millions of ordinary people, what sort of psychopath wouldn't be?
Mortgages are not a scam, I'll give you that. But I'm pretty sure that anyone with a functional moral compass would recognise that usury is immoral.
I asked for an alternative way to finance a house. You either save up yourself or you borrow from someone who has the assets. I don't see a third option.
Yeah ofcourse it would be nice if my mortage didn't have interest or had really low one like it did up untill about a year ago. I'm not against that if my bank decides to offer me such option but that's just fantasy and in no way relevant to the discussion. Ofcourse it would be beneficial to the vast majority of people if the wealthiest ones would settle for less. That's unfortunelately just not the case.
I totally agree with you. What I want is pie in the sky. Without regulation, nothing will change.
The alternative would've been where banks don't own half of everything, but here we are. Next best thing would be that government would've kept prices in check, but instead are incentivized for prices to go up because even after it's paid off the owner is still responsible to pay property taxes. If those taxes went toward preventing homelessness, I think would make more sense.
I'll take buying over renting any day. I paid $68k for my house. My loan payment is $460/month. While other I know have had their rents double and have been forced to move to smaller places, my house payment hasn't changed.
That's cool, but we all didn't have the ability buy something when it was affordable...
I paid twice as much as my neighbor with the same house, who bought his 18 years before I did, and he paid twice as much as the neighbors acress the street that bought theirs 20 years before he did. Heck, my mom bought a 3 bedroom house with a 3 car garage on 3.5 acres for $18,000 in 1974. She had to have the house replaced about 10 years ago after it was destroyed and it was $140,000 just for the house. Her neighbors that had the same amount of land have sold theirs to developers who built apartments and multiple homes on what used to be a single home plot. The land is worth over 10 times what she paid for it with the house on it.
So, if you bought the same house the same as mine, it would probably be twice what I paid for it. You would still have the benefit of not having your rent hiked every year or two.
House prices will always go up, baring some unforseen disaster, war, or political turmoil. That's the way it's always been.
Not OP, but the normalization of something necessary requiring to borrow a lump sum and take 20-30+ years to pay off plus interest. Even the valuation of homes is ridiculous in itself, since those numbers are somewhat based on subjective values or "how much can I get away with charging?". Sure, you have a baseline of materials and labor but the subjective part is just what's around that property. Even if you lived in a shed and someone builds a mansion next door, now your value magically goes up? It's a gimmick that only further drives inflation with fluff being added to demand. The shift of practically all US housing markets from the pandemic (people changing employment, vacancies created from those who died) went into a boom because companies or those with extra money started buying the excess supply so fast that it inflated demand. I'll stop ranting but I think it's all ridiculous and unsustainable and would like to mention that renting is just a subscription of residence.
But what's the alternative? Houses are going to be expensive no matter what. I only paid 100k for mine which is relatively cheap for a house but I still couldn't have afforded to buy it without taking a loan. My friends are now paying higher rent than I pay off my mortage every month. After 15 years or so I no longer need to pay the mortage AND I have a house I can sell but my friends are still paying rent and have nothing to show for it.
This is unfortunately a fallacy. Those paying rent don’t have nothing to show for it — they pay for a roof over their head. So do you with your mortgage. At the end of your mortgage term, yes, you have an asset that those paying rent don’t, but you also had to drop a large sum of money upfront that they didn’t. Theoretically they were able to invest that money you paid into other assets that may or may not have appreciated more over that same period of time. Additionally, renters are often much more able to move should their living circumstances change.
At the end, you both pay for shelter for a period of time. And yes the argument is largely theoretical and vastly dependent on external factors, but it’s not true that owning is always better than renting.
(I say this all as a homeowner as well, FWIW).
A mortgage where, for instance, 90% of each payment goes to repaying the capital of the mortgage, and 10% to the interest. There's no way it's fair that you should need to pay 2x the value of your house over 25 years.
But why would anyone lend you money for free? What's in it for them?
That's not free. That's just a less predatory rate of return.
I would further suggest that there is a hard cap on the interest which can be charged on any borrowing.
But if I'm a lender and I have spare money to invest I can always just put it into the stock market where I'm on average getting a 7% yearly return. It only makes sense to lend that money to an individual if I'm getting a better rate. Otherwise I'm just losing money.
Then someone else will take that lender's place. Mortgage lending will, at whatever percentage, produce a stable rate of return. If anything, preventing exorbitant interest rates mitigates much of the risk involved in lending.
Why would anyone do that when they get better return for their money elsewhere? You're basically expecting people to do charity or simply just be incompetent and make bad financial decisions thus effectively making you the scammer.
Hardly. The market still exists, and lenders can still make a profit, just maybe not as much. It's not rocket science.
That's merely a desire for a more "fair" system or frankly just something that benefits you rather than someone else. The discussion here is about scams and my argument is that mortage is not one.
You asked for an alternative and I gave you one. You just aren't happy at the idea that massive lenders can afford to make less.
And of course I'm motivated that it benefits me, and millions of ordinary people, what sort of psychopath wouldn't be?
Mortgages are not a scam, I'll give you that. But I'm pretty sure that anyone with a functional moral compass would recognise that usury is immoral.
I asked for an alternative way to finance a house. You either save up yourself or you borrow from someone who has the assets. I don't see a third option.
Yeah ofcourse it would be nice if my mortage didn't have interest or had really low one like it did up untill about a year ago. I'm not against that if my bank decides to offer me such option but that's just fantasy and in no way relevant to the discussion. Ofcourse it would be beneficial to the vast majority of people if the wealthiest ones would settle for less. That's unfortunelately just not the case.
I totally agree with you. What I want is pie in the sky. Without regulation, nothing will change.
The alternative would've been where banks don't own half of everything, but here we are. Next best thing would be that government would've kept prices in check, but instead are incentivized for prices to go up because even after it's paid off the owner is still responsible to pay property taxes. If those taxes went toward preventing homelessness, I think would make more sense.
I'll take buying over renting any day. I paid $68k for my house. My loan payment is $460/month. While other I know have had their rents double and have been forced to move to smaller places, my house payment hasn't changed.
That's cool, but we all didn't have the ability buy something when it was affordable...
I paid twice as much as my neighbor with the same house, who bought his 18 years before I did, and he paid twice as much as the neighbors acress the street that bought theirs 20 years before he did. Heck, my mom bought a 3 bedroom house with a 3 car garage on 3.5 acres for $18,000 in 1974. She had to have the house replaced about 10 years ago after it was destroyed and it was $140,000 just for the house. Her neighbors that had the same amount of land have sold theirs to developers who built apartments and multiple homes on what used to be a single home plot. The land is worth over 10 times what she paid for it with the house on it.
So, if you bought the same house the same as mine, it would probably be twice what I paid for it. You would still have the benefit of not having your rent hiked every year or two.
House prices will always go up, baring some unforseen disaster, war, or political turmoil. That's the way it's always been.