But the 1400 doesn’t require any trust since if they can’t afford that, they’re out. If they can’t afford the loan, the bank would be out the loan sum.
If I had an Apple that you want and I sold it to you but you didn’t eat the apple and it never got spoiled, I could sell the apple to someone else if you didn’t finish payment. You are just one step in a series of many many re-sales of the same house. The house is owned by the banks. They just change which bank is on the title after your temporary ownership. You see, you have this funny thing we all humans have…limited shelve life. Banks don’t have that. They can last for as long as many generations of people. So long as the financials work, they can stay afloat. Not you. You die, your kids die, their kids die. People tend to not stick around the same house forever. So every interchange between you and the bank, the bank always wins. You always lose to inflation. The bank always wins because a house always is worth what people are willing to pay for a house…it rides inflation.
The life of a mortgage is worth far more than the house. It’s in their best interest that you stay in the house for the entire 30 years of the mortgage and pay for it on time every time. Foreclosure is expensive.
Its only temporarily expensive. Let’s say there’s only one bank and one house. Then whenever the owners fuck up and they lose the house as expected, the same bank owns the house. Now just add an “s”. Whenever everyone fucks up their houses are owned by the same banks. The banks are not there to help you. They are there to extract your labor into a form that can be monetized. So having bank X or bank Y own the house doesn’t really matter… A bank will eventually own your house back. You work all your life but there’s no venue to actually keep a house under your control and ownership. Just taxes are enough. Fuck up in taxes and you lose the house.
I think I understand what you’re trying to say but you’re still missing the main point. You pay interest for the full 30 years of the mortgage the most profitable position for the bank is for you to pay that interest for the full 30 years of the mortgage. It’s not temporarily expensive for them to foreclose they lose out on 30 years of being able to rake in money while doing absolutely nothing.
Yes agreed. But they still ride inflation because they create it. You were supposed to pay 1,000,000 but stopped at 7000,000? They’ll sell it for 1,300,000 and someone will buy it. If not, someone will buy it at the loss. That one bank loses the 300,000, but another bank makes 1,000,000 because someone will buy it. Say your monthly was $350 and you stop paying. The bank then takes the home and pays a Realtor to sell it. A few months later they are making $450 a month. They just lost some time on it. If you pay it completely then another bank eventually owns the house when you sell one day.
You were supposed to pay 1,000,000 but stopped at 7000,000? They’ll sell it for 1,300,000 and someone will buy it.
Any profits from a foreclosed home go to the evicted homeowner. Banks do not make money on foreclosures. Banks do not want to foreclose on you, they want you to pay your bill.
People keep falling for this farse. Yes, the individual bank would like to “win” but all banks are the same monster. Think of the average. Go to home depot and realize that Lowes has the same shit on sale. The same monster, just different colored doors and maybe the products look different. But Stanley makes the same money regardless of where you buy your Stanley tape measure. For banks it’s the Dollar TM. Regardless of where you take or put back the dollars, its the same monster behind the bank. Its only goal is to get you to go do work, to transform those hours into money/dollars. On average, they own your house. You “buy” your house from one colored “door” and then another door takes it back later when you can’t pay for “whatever” reason. They figure out what “whatever” reason will be before it happens. Like if you’re 60, they know you’re about to return the house. You think you’re leaving it to your kids. Your kids don’t want to live there anymore. So they sale…who owns that loan? The banks do. So the house returns to “a” bank, a different colored door to the same monster that keeps everyone’s money.
Less profitable is not unprofitable. But yes interest is typically front-loaded and if you’re still deemed to a higher risk typically have to pay insurance on top of that. In this case though they’re hedging against the fact that you’re going to move not that you’re going to foreclose.
Banks do not make a profit on foreclosure. If the house sales for more than the bank is owed (including foreclosure fees), then any surplus is given to the original owner.
Not necessarily. There is no guarantee that the house will well for enough. Normally this works fine, but sometimes a loan can be underwater, and have a larger balance than the house is worth; or it could not have enough equity to cover the cost of foreclosure and flipping. This is why the US requires mortgage insurance for mortgages with less than 20% equity.
You could imagine a scenerio where banks find a loophole to skirt the PMI requirements causing a real estate bubble to drive up the purchase price of houses. Them a recession causes widespread defaults, further triggering a collapse of home prices, forcing financial institutions to be unable to recoup the cost of loans. Loans which, incidentally, were rated as very unlikely to default due to other financial schenenagans. We call this scenerio 2008
That’s not completely true, because it depends on the future value of your house. Plenty of banks got burned in the early 2000s when they gave out too many loans and then all of a sudden the houses weren’t worth what people owed on them.
Foreclosed houses very rarely sell for what they’re worth and it’s not uncommon for people who are foreclosed on the trash the house on the way out.
When my wife and I were recently looking for a house in the city we moved to recently one of the houses we looked at had had the air conditioner taken by the previous owners because it had been foreclosed on. I’m serious, the entire fucking condenser was taken.
Just pointing out that foreclosing on a house isn’t profitable for a bank.
not really. They got paid at least some of the mortgage, housing prices keep going up and damage is fixed by paying some poor asshole peanuts. Even if it isn’t profitable , I don’t really care, I’m not losing any sleep at night over the fucking assholes.
No part of anything that I’ve said should be construed as defending a bank. The fact that you keep going out of your way to call it that is why I’m telling you that I feel you need to calm down.
The only point I was trying to make is that foreclosure is neither in the best interest of the bank or the homeowner.
After 2007/2008 it became very clear to banks that they need to prepare for the case where people can’t make mortgage payments because the economy crashed, and house values have plummeted because nobody’s able to buy a house because the economy crashed.
When it’s your house you’re likely to go for the higher quality options when the major repairs hit and do more timely repairs on things landlords will ignore.
The difference is that you’re not living in the house if you’re a landlord. A smart landlord will still do high quality repairs on certain things: roof repairs, pipe leaks, electrical issues, etc. Not fixing those things quickly and fixing them well could result in long-term damage to the property. But, there’s another class of problems that are annoying to the tenant but not a priority for the landlord. For example, a toilet that doesn’t flush well. That’s an annoyance, but probably won’t damage the property in any way, so the landlord might not care much.
Even in the best of cases, landowners may not be generating a direct profit but are generating equity in the home.
I had to explain this to one of my landlords (he was a first time landlord and it was his old place) once a long time ago. He was quite shocked that he wasn’t making nearly as much money as expected when the homestead exemption was lifted from the home. He tried to increase our rent well above the average for the area because of it and we had to threaten to walk.
LOL. If you want to dump 300,000 into a house… Years and years of your own work…just to have to pay $300 bucks every month for 30 years to double your money? To then repair the house with that money and end up owning a house in 30 years when you’re too old to work…that’s not a good deal.
Landlords, when they’re organized, put some of the rent money aside for repairs, and don’t touch it until those repairs are needed. Profit, is the money they make on top of that.
Their rent prices are large enough, to both cover the entirety of the repairs, and make sure that there is even more money left over in the end, for profit.
“Sudden” repairs are neither unpredictable, nor chaotic. Houses, appliances, everything, can only last so long, and it’s easy to know how long the AC unit and the roof insulation is going to last, the estimates are right there when you buy the things.
See, your foolish mistake is applying morals and logic to the profit drive. There are none to be found, there. Just people who want more money, because they can, and have the law behind their back, threatening you with homelessness and the destruction of your continued existence.
They’re insured against your pyrotechnic solutions. Are you? Typically insurance doesn’t pay out to the policy holder if they intentionally cause the damage.
But it also doesn’t include the tax deduction on the interest, and the fact that the principal is essentially a saving account you are paying into yourself every month, which will come back to you when you sell the house.
It’s really fucked up how they prevent people from home ownership. And they even try to sell this through the mainstream media as making it sound like sometimes renting is a better option. In some super rare cases it is a better option. But mostly it is not.
Anyone thinking they’ll making a dent on the principle for the fist five years is going to be very disappointed. Selling get five years, closing costs are likely to put you in the red.
Renting is better only if you’re not committed to the area. But if you end up renting the same place for 10 years, you’re definitely losing out.
There’s no single solution here and playing the media on this one sounds childish. Read better media.
That’s about the cost of my mortgage, and I also pay $300 in property taxes, $400+ utilities, $120 insurance and have to pay for repairs. That $1400 rent number seems really cheap, I’m guessing it’s comparing a single bedroom apartment to a house? Definitely not apples to apples.
Except now they can sell the home. Which probably has appreciated on value since the loan. Plus the loan interest since it was purchased originally. And payments at the front of a mortgage are almost entirely interest since the principal is so high.
Any recession can cause a downward pressure on house prices at the same time as difficulties paying for a mortgage. You may not be able to sell the home for enough to pay off the mortgage when you get into trouble.
Yeah, that idea is very 2007. The 08 crash was a great time to buy a house if you still had a job because a lot of foreclosed houses were for sale for way less than they’d been bought for by their previous owners.
But the 1400 doesn’t require any trust since if they can’t afford that, they’re out. If they can’t afford the loan, the bank would be out the loan sum.
the bank isn’t out of jack shit, they reposess your house.
Which they can re-sale at a higher value to the next fool. So it’s in their interest that you pay for a while, then sale or fail.
Congrats, you recreated the 2008 financial crisis!
If I had an Apple that you want and I sold it to you but you didn’t eat the apple and it never got spoiled, I could sell the apple to someone else if you didn’t finish payment. You are just one step in a series of many many re-sales of the same house. The house is owned by the banks. They just change which bank is on the title after your temporary ownership. You see, you have this funny thing we all humans have…limited shelve life. Banks don’t have that. They can last for as long as many generations of people. So long as the financials work, they can stay afloat. Not you. You die, your kids die, their kids die. People tend to not stick around the same house forever. So every interchange between you and the bank, the bank always wins. You always lose to inflation. The bank always wins because a house always is worth what people are willing to pay for a house…it rides inflation.
The life of a mortgage is worth far more than the house. It’s in their best interest that you stay in the house for the entire 30 years of the mortgage and pay for it on time every time. Foreclosure is expensive.
Its only temporarily expensive. Let’s say there’s only one bank and one house. Then whenever the owners fuck up and they lose the house as expected, the same bank owns the house. Now just add an “s”. Whenever everyone fucks up their houses are owned by the same banks. The banks are not there to help you. They are there to extract your labor into a form that can be monetized. So having bank X or bank Y own the house doesn’t really matter… A bank will eventually own your house back. You work all your life but there’s no venue to actually keep a house under your control and ownership. Just taxes are enough. Fuck up in taxes and you lose the house.
I think I understand what you’re trying to say but you’re still missing the main point. You pay interest for the full 30 years of the mortgage the most profitable position for the bank is for you to pay that interest for the full 30 years of the mortgage. It’s not temporarily expensive for them to foreclose they lose out on 30 years of being able to rake in money while doing absolutely nothing.
Yes agreed. But they still ride inflation because they create it. You were supposed to pay 1,000,000 but stopped at 7000,000? They’ll sell it for 1,300,000 and someone will buy it. If not, someone will buy it at the loss. That one bank loses the 300,000, but another bank makes 1,000,000 because someone will buy it. Say your monthly was $350 and you stop paying. The bank then takes the home and pays a Realtor to sell it. A few months later they are making $450 a month. They just lost some time on it. If you pay it completely then another bank eventually owns the house when you sell one day.
Any profits from a foreclosed home go to the evicted homeowner. Banks do not make money on foreclosures. Banks do not want to foreclose on you, they want you to pay your bill.
People keep falling for this farse. Yes, the individual bank would like to “win” but all banks are the same monster. Think of the average. Go to home depot and realize that Lowes has the same shit on sale. The same monster, just different colored doors and maybe the products look different. But Stanley makes the same money regardless of where you buy your Stanley tape measure. For banks it’s the Dollar TM. Regardless of where you take or put back the dollars, its the same monster behind the bank. Its only goal is to get you to go do work, to transform those hours into money/dollars. On average, they own your house. You “buy” your house from one colored “door” and then another door takes it back later when you can’t pay for “whatever” reason. They figure out what “whatever” reason will be before it happens. Like if you’re 60, they know you’re about to return the house. You think you’re leaving it to your kids. Your kids don’t want to live there anymore. So they sale…who owns that loan? The banks do. So the house returns to “a” bank, a different colored door to the same monster that keeps everyone’s money.
I get what you are saying, but I think you are vastly overestimating how much foreclosed houses sell for.
Interest is typically front loaded, yeah? The loan only becomes less profitable as time goes on with inflation growing and interest dwindling.
Less profitable is not unprofitable. But yes interest is typically front-loaded and if you’re still deemed to a higher risk typically have to pay insurance on top of that. In this case though they’re hedging against the fact that you’re going to move not that you’re going to foreclose.
Banks do not make a profit on foreclosure. If the house sales for more than the bank is owed (including foreclosure fees), then any surplus is given to the original owner.
So the bank gets the money they are owed?
Not necessarily. There is no guarantee that the house will well for enough. Normally this works fine, but sometimes a loan can be underwater, and have a larger balance than the house is worth; or it could not have enough equity to cover the cost of foreclosure and flipping. This is why the US requires mortgage insurance for mortgages with less than 20% equity.
You could imagine a scenerio where banks find a loophole to skirt the PMI requirements causing a real estate bubble to drive up the purchase price of houses. Them a recession causes widespread defaults, further triggering a collapse of home prices, forcing financial institutions to be unable to recoup the cost of loans. Loans which, incidentally, were rated as very unlikely to default due to other financial schenenagans. We call this scenerio 2008
*sells
This ignores the market manipulation they can do by just selling to “totally not related to out bank… blackrock or something”.
Are they not required to sell it on the market? So if a related company bids low, anyone else can just swoop in and take it.
That’s not completely true, because it depends on the future value of your house. Plenty of banks got burned in the early 2000s when they gave out too many loans and then all of a sudden the houses weren’t worth what people owed on them.
If there is ever an economic crisis that results in housing prices dropping, the banks get bailed out.
I’ll shed a single tear for those banks who reposessed those houses that are now worth an absolute fucking fortune when I get a house of my own.
I’m not crying for the banks, but that’s why they don’t just give out loans to anyone.
Foreclosed houses very rarely sell for what they’re worth and it’s not uncommon for people who are foreclosed on the trash the house on the way out.
When my wife and I were recently looking for a house in the city we moved to recently one of the houses we looked at had had the air conditioner taken by the previous owners because it had been foreclosed on. I’m serious, the entire fucking condenser was taken.
yeah but you’re not going to make me feel sympathy for JP Morgan Chase.
They should’ve cut back on their avocado toast if they wanted to run a successful bank
I wasn’t trying to make you feel sympathy for a bank. Just pointing out that foreclosing on a house isn’t profitable for a bank.
not really. They got paid at least some of the mortgage, housing prices keep going up and damage is fixed by paying some poor asshole peanuts. Even if it isn’t profitable , I don’t really care, I’m not losing any sleep at night over the fucking assholes.
Nobody was asking you to lose sleep. I kind of feel like you need to calm down.
why are you so hell bent on defending the banks? I feel you need to relax and not put in overtime.
No part of anything that I’ve said should be construed as defending a bank. The fact that you keep going out of your way to call it that is why I’m telling you that I feel you need to calm down.
The only point I was trying to make is that foreclosure is neither in the best interest of the bank or the homeowner.
After 2007/2008 it became very clear to banks that they need to prepare for the case where people can’t make mortgage payments because the economy crashed, and house values have plummeted because nobody’s able to buy a house because the economy crashed.
That $950 mortgage also doesn’t include taxes and insurance plus the cost to maintain a house. All of that is wrapped into the cost of rent.
Mortgage calculators are deceiving.
And the profit the landlord takes on top of that. Landlords don’t generally rent out to break exactly even on cost.
Landlords also do cheaper repairs.
When it’s your house you’re likely to go for the higher quality options when the major repairs hit and do more timely repairs on things landlords will ignore.
If you’re the landlord, it is your house.
The difference is that you’re not living in the house if you’re a landlord. A smart landlord will still do high quality repairs on certain things: roof repairs, pipe leaks, electrical issues, etc. Not fixing those things quickly and fixing them well could result in long-term damage to the property. But, there’s another class of problems that are annoying to the tenant but not a priority for the landlord. For example, a toilet that doesn’t flush well. That’s an annoyance, but probably won’t damage the property in any way, so the landlord might not care much.
Even in the best of cases, landowners may not be generating a direct profit but are generating equity in the home.
I had to explain this to one of my landlords (he was a first time landlord and it was his old place) once a long time ago. He was quite shocked that he wasn’t making nearly as much money as expected when the homestead exemption was lifted from the home. He tried to increase our rent well above the average for the area because of it and we had to threaten to walk.
LOL. If you want to dump 300,000 into a house… Years and years of your own work…just to have to pay $300 bucks every month for 30 years to double your money? To then repair the house with that money and end up owning a house in 30 years when you’re too old to work…that’s not a good deal.
You’d be stupid to do that, even if you were genuinely trying to be charitable about renting. You’d want some profit for repairs and sudden issues.
Revenue for repairs and sudden issue is still breaking even, the point of profit for landlords is to well generate profit on the bottom line.
A landlord is almost always making money even if they are just “breaking even” on the mortgage.
If the landlord is still paying for a mortgage, the profit goes into their equity gain.
Once the mortgage is paid off, the profit goes into the landlords pocket.
This is how many people get started being parasites on society. They have other people pay the bank while they gain the assets of their labor.
You’ll have to have some profit if you want money to pay for the repairs and sudden issues without it being from your pocket.
Did… You read their comment?
I did. Where would the money for the sudden issues come from if you didn’t make a profit from the outset?
Landlords, when they’re organized, put some of the rent money aside for repairs, and don’t touch it until those repairs are needed. Profit, is the money they make on top of that.
Their rent prices are large enough, to both cover the entirety of the repairs, and make sure that there is even more money left over in the end, for profit.
“Sudden” repairs are neither unpredictable, nor chaotic. Houses, appliances, everything, can only last so long, and it’s easy to know how long the AC unit and the roof insulation is going to last, the estimates are right there when you buy the things.
Why the fuck should the price to rent something give profit over the monthly pay of a loan to own it?
Landowners want renters to pay for their stuff. They’re lazy leeches.
See, your foolish mistake is applying morals and logic to the profit drive. There are none to be found, there. Just people who want more money, because they can, and have the law behind their back, threatening you with homelessness and the destruction of your continued existence.
Jokes on my landlord, if I ever lose everything, so does he. 🔥
Damage to Capital is based.
They’re insured against your pyrotechnic solutions. Are you? Typically insurance doesn’t pay out to the policy holder if they intentionally cause the damage.
Well in this scenario, presumably I have “lost everything” and therefore do not care whether the landlord is insured against fire.
He’ll burn just the same with or without insurance.
If you’re taking in rent for only the predictable running costs then how are you paying for some sudden issues?
Every mortgage calculator I have used includes fields for taxes and insurance.
But it also doesn’t include the tax deduction on the interest, and the fact that the principal is essentially a saving account you are paying into yourself every month, which will come back to you when you sell the house.
It’s really fucked up how they prevent people from home ownership. And they even try to sell this through the mainstream media as making it sound like sometimes renting is a better option. In some super rare cases it is a better option. But mostly it is not.
Anyone thinking they’ll making a dent on the principle for the fist five years is going to be very disappointed. Selling get five years, closing costs are likely to put you in the red.
Renting is better only if you’re not committed to the area. But if you end up renting the same place for 10 years, you’re definitely losing out.
There’s no single solution here and playing the media on this one sounds childish. Read better media.
Five years in and 1/7 of my principal is already paid off. That’s a nice dent.
Yeah it’s kinda depressing how owning a home is the only financially responsible option, all other things being equal
That’s about the cost of my mortgage, and I also pay $300 in property taxes, $400+ utilities, $120 insurance and have to pay for repairs. That $1400 rent number seems really cheap, I’m guessing it’s comparing a single bedroom apartment to a house? Definitely not apples to apples.
Except now they can sell the home. Which probably has appreciated on value since the loan. Plus the loan interest since it was purchased originally. And payments at the front of a mortgage are almost entirely interest since the principal is so high.
Any recession can cause a downward pressure on house prices at the same time as difficulties paying for a mortgage. You may not be able to sell the home for enough to pay off the mortgage when you get into trouble.
I have never in my life seen house prices go down. They just quit going up as fast.
In my life I’ve had two times when they went down along with unemployment going up.
The 2008 crash and a local crash due to the biggest employer in town being on the verge of bankruptcy in the 1990s.
Yeah, that idea is very 2007. The 08 crash was a great time to buy a house if you still had a job because a lot of foreclosed houses were for sale for way less than they’d been bought for by their previous owners.
You’re right, I had a brain fart