A conundrum
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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.
If the loan is fixed at an amount or matched to inflation, you'd still have to pay or lose the house.
That's still a pretty bullshit excuse, because it's not like all that money you've already spent on paying the house will magically come back to you, you'd still be homeless if you lose the house, and the bank would still have a house available for the market, even if it's at a lower value than before.
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Even just renting an apartment is full of bullshit.
"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."
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 -
I have no idea what that is, but I dont think I wanna know. I did want tankless on demand, but the service guy convinced me it's not worth it, and I regret my decision. Said I won't save much because the power draw is much higher than a water heater, so even though the heater is always keeping it warm, the on demand still takes more. I think I may have needed additional wiring for the electric and believe that's really the reason he swayed me away.
Sounds like it is not common where you are, consider yourself lucky. Where I live, all new houses are built with predatory rental water heaters. $50-100/month forever. You end up paying the purchase price many times over. Electric tankless heaters use an insane amount of electricity when they operate. Overall they are more efficient, but the wiring needed to supply it will greatly increase the price, often requiring a panel upgrade and possibly an upgrade in service to the house.
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As long as interest is lower than stock market return your mortgage should never go away
Sure, but when you refi to invest, it's not really "paying for somewhere to live" any more
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If the loan is fixed at an amount or matched to inflation, you'd still have to pay or lose the house.
That's still a pretty bullshit excuse, because it's not like all that money you've already spent on paying the house will magically come back to you, you'd still be homeless if you lose the house, and the bank would still have a house available for the market, even if it's at a lower value than before.
And if it gets so bad that the bank starts losing money... no worries, the government will simply bail them out like usual!
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This isn’t true in my experience at all. Either rent is cheap where you are or you’re looking at expensive houses or not for a 30 year period. The rate currently is around 6-9%. It would only be more expensive if the house is. No other hidden fees
wrote last edited by [email protected]Parents and brother went in on a house together so he could live near work. Rents out the main floor for $3750 a month (3 bedroom) and that covers the mortgage so he can afford to pay the utilities and lives in the basement.
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Is it ironic? We can't know nowadays.
Im responding to someone saying laws not protecting the weak from the strong is a failure, so i think we're pretty well i!to surrealist nonsense fantasy land.
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Sounds like it is not common where you are, consider yourself lucky. Where I live, all new houses are built with predatory rental water heaters. $50-100/month forever. You end up paying the purchase price many times over. Electric tankless heaters use an insane amount of electricity when they operate. Overall they are more efficient, but the wiring needed to supply it will greatly increase the price, often requiring a panel upgrade and possibly an upgrade in service to the house.
What happens if or when it breaks? Since it's rented, is that at the very least not on you? I would imagine any or all work on it shouldn't cost you anything since you're paying monthly for it? Not that I want that, but do you get anything for this rental fee?
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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.
The alternative is some variety of private mortgage insurance. The insurer bets that housing prices will rise, so that you won't default. If you do default, they reimburse the lender on their losses associated with your default.
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i swear my pancreas, the hospital and my bank account are conspiring against me
It took me starting my own business and throwing every dollar into savings to get a house. I advise anyone looking to get a house especially younger people to live at their parents as long as they can and save money that way too. But the standard if living keeps going up while pay stays crap too. It’s really hard. Every conspires against us. Life blows sometimes. lol
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Even just renting an apartment is full of bullshit.
"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."
Yeah, the 3x salary requirements are insane when housing accounts for almost 50% of people's take home pay in most places.
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You're describing slums, favelas, and shantytowns.
I'm describing the way humans lived and built cities since the dawn of civilization. Start small. Improve over time.
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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.
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If the loan is fixed at an amount or matched to inflation, you'd still have to pay or lose the house.
That's still a pretty bullshit excuse, because it's not like all that money you've already spent on paying the house will magically come back to you, you'd still be homeless if you lose the house, and the bank would still have a house available for the market, even if it's at a lower value than before.
I'm not sure if you've really understood the dynamic.
Suppose you buy for $700k, pay off $50k, but then the market collapses and the property is only worth $600k.
You'll be $50k better off if you just stop paying and let the bank foreclose.
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The alternative is some variety of private mortgage insurance. The insurer bets that housing prices will rise, so that you won't default. If you do default, they reimburse the lender on their losses associated with your default.
as in the subject of this post, yes.
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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.
They need you deposit that down payment cash ASAP so they can lease it to billionaires and crypto exchanges.
No, this is patently false and borne of a misunderstanding. Idiocy.
When providing a mortgage, how does a bank get money to lease to billionaires and crypto exchanges?
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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.
The financial illiteracy of lemmy users always amazes me.
PMI is not double dipping.
It keeps the risk reasonable so that interest rates can remain reasonable.
With no PMI there's extra risk that would need to be priced in to interest.
No one likes PMI, but it's not evil.
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They need you deposit that down payment cash ASAP so they can lease it to billionaires and crypto exchanges.
No, this is patently false and borne of a misunderstanding. Idiocy.
When providing a mortgage, how does a bank get money to lease to billionaires and crypto exchanges?
Banks do leverage mortgage debt. Essentially the same process, in turn.
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What happens if or when it breaks? Since it's rented, is that at the very least not on you? I would imagine any or all work on it shouldn't cost you anything since you're paying monthly for it? Not that I want that, but do you get anything for this rental fee?
Yes, if it fails, they will either repair or replace it at least.
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This isn’t true in my experience at all. Either rent is cheap where you are or you’re looking at expensive houses or not for a 30 year period. The rate currently is around 6-9%. It would only be more expensive if the house is. No other hidden fees
Well in my very recent experience it is extremely, painfully, unavoidably true. That's why I said it. We just bought a house, 150k less than we qualified for, and our monthly payment is 33% higher than we were paying in rent. Rent is far from cheap, there's just no such thing as an inexpensive house unless you want one in a terrible neighborhood or an hour drive outside the city. In the first case, not only is it a bad idea just to live in these neighborhoods, the chances of making money on the resale are next to nil. The burbs option of course offers more for your money, but that comes with more maintenance, yardwork, housework, gas money, transit stress, etc. We worked with very knowledgeable, trustworthy realtor and mortgage brokers and there's simply no math in the current market that gets mortgage payments lower than the rent we were paying without buying a literal, active crack house.
And to claim there's no extra fees involved with buying and owning a home compared to renting is either utter delusion or repugnant gaslighting.
