A conundrum
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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.
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Surely, this depends a lot on what market you’re in. If you’re in a very expensive area and need to take a big loan with a high fixed rate, I can see that being the case but renting the equivalent place would probably be extremely expensive too.
renting the equivalent place would probably be extremely expensive too.
Right, like I said, mortgage is not cheaper, certainly not half as cheap. The market I'm in is a metropolis, it contains every range of the market, it just depends how much gun violence you prefer.
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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.
wrote last edited by [email protected]Rental water heaters are some weird Canadian scam.
My ~70 year old water heater failed 5 years ago. I drove to the nearest hardware store, paid $700 for a new one, and installed it myself.
Comparing efficiency between electric and gas is complete nonsense. You need to compare operating cost. In my market, with very high electric prices, it’s $60/yr for gas tank, and $1,100/yr for electric tankless.
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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.
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I hate the housing situation too but this is seriously a braindead take
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Banks do leverage mortgage debt. Essentially the same process, in turn.
wrote last edited by [email protected]But how do they lease your deposit to billionaires and crypto exchanges?
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I hate the housing situation too but this is seriously a braindead take
Braindead take? This is just the reality of the situation for a lot of people
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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.
wrote last edited by [email protected]I seem to completely misunderstand the dynamic.
As I see it, you have paid $700k for the house with the bank's money (in this thread there is no deposit), bought back some of the house from the bank with $50k of your own money and then lost the house so you're out $50k with no house.
If the bank does pay out some of the value of the house to you based on equity, it's just going to be a smaller amount than $50k since the value of the house is lower and part of your repayment went to interest so you don't even get $50k worth of equity. This feels like a worse position to me.
Like the bank has lost money for sure, but we are not getting that are we?
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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.
We probably live in different countries, but where I live it's more like you can't get pre-approved for anything unless you either have a large amount of money saved up, or your salary is high enough that it's far beyond what you would reasonably need to get paid to afford the mortgage.
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I seem to completely misunderstand the dynamic.
As I see it, you have paid $700k for the house with the bank's money (in this thread there is no deposit), bought back some of the house from the bank with $50k of your own money and then lost the house so you're out $50k with no house.
If the bank does pay out some of the value of the house to you based on equity, it's just going to be a smaller amount than $50k since the value of the house is lower and part of your repayment went to interest so you don't even get $50k worth of equity. This feels like a worse position to me.
Like the bank has lost money for sure, but we are not getting that are we?
You're overthinking it.
The loan history is not relevant. The $50k you paid is gone. Sunk costs fallacy and all that.
A mortgage isn't a complicated shared equity situation.
You owe the bank $650k and if you don't pay they will take the house worth $600k.
Obviously if you default there will be legal problems and you're still on the hook for the last $50k and so on, but there's no incentive to keep paying. Like if you declare bankruptcy then you don't have to pay the $50k and you can start saving for a deposit on your next house for when the exclusion period expires.
