Why would I want to go into debt with a bank for thirty fucking years? Why does a bank get so much free money over that thirty years in the form of interest, for almost nothing? All they do is front the cash, and that’s it. Why does that justify so much free profit? Why is this the way it has to work?
Some of it is that it needs to be profitable to be a reality. If they gave you 300k and you paid back the exact percentage of 35years x 12 months each month they’d lose money.
Other parts are that you’re competing with their other opportunities.
It’s a necessary evil unfortunately.
What you should be asking is why can corporations own land. Residential land is for people only, that would lower costs and give more of a chance to the people.
Corporations owning land is the current way many young / low income people get housing.
Renting is cheaper for people that might move in ~5 years. Moving citys is an important way to gain income.
I think baning cooperate ownership of “residential land” would be another government handout to owners at the expense of renters. Id prefer policies that increase housing supply instead. For example, investment in nonmarket housing, and permitting reform favoring infill development.
I’m not banning landlords I’m banning vulture funds, pension funds, agencies, conglomerates, multinationals etc. from owning homes.
This makes for less competition in buying homes for those people, allowing for prices to stay realistic. So you can buy two houses if you want, though I’d tax the shit out of you for the second and subsequent houses.
Also if you weren’t competing with corporations rents would be lower, but you could buy a house and sell again in five years when you move on.
I’m not banning landlords I’m banning vulture funds, pension funds, agencies, conglomerates, multinationals etc. from owning homes.
I guess i missunderstood you. As far as I’ve seen, vacancies are quite low in places where housing is scarce. Investment properties are usually rented out.
would be lower, but you could buy a house and sell again in five years when you move on.
Closing costs are very high. It would be difficult to make housing cheap enough that the benifits to owning a home outweighs these costs. Also, you would need to sell the house quick, so that you don’t pay for two houses at a time. But if housing was no longer scarce, it would be hard to sell the house quick.
I cant imaging a future where it makes sense for everyone to own their own home. We should always consider renters when making public policy, even though they have little political power.
By nonmarket housing, i mean housing that’s either own and run by the government, owned and run by nonprofits (probably funded by the government), or owned and run by coops.
In my part of the world, public housing is a bad word, (due to bad examples caused by government disinvestment) so I try to use other words.
Generally speaking they have way lower interest rates because they have financial incentive and legal requirements to raise their members credit/capital.
Because they take on the risk of what happens if you don’t pay it or default. They have to pay out a massive amount of money that they could have used for other investments, instead you become the investment and they just hope you’ll pay off, literally.
You don’t have to have the bank front you a loan though, you could just save up for 30 years and pay it all off with cash, but given the way housing prices are increasing, that seems to be a terrible plan. By the time you’ve saved up $150k for that $300k home, that home will likely be worth $450k lol. It’s better to get in early, lock in a rate (and refinance later), and start to pay off your mortgage now.
Get a loan when interest rates are low and/or refinance when they go lower. Your alternatives are buying a house with cash or renting. I’m assuming cash is off the table, so let’s compare renting with paying off a mortgage, which can often have similar monthly payments. When you rent, you have fewer responsibilities, but you also have less control over your space and lose every penny of your monthly payment. When you own, you have more financial obligations eg repairs or upgrades, but you have more control over your space, and a portion of your monthly payment goes toward your principal, which becomes equity. That equity is yours if/when you decide to sell. If you want to pay off your mortgage more quickly than the amortization schedule and pay less interest, that is also your prerogative.
But paying rent is no different than paying interest on a home loan as far as your pocketbook is concerned, except you get to keep some of your home loan payment every month
The 30 year mortgage revolutionized hime ownership in the US. Before it existed, home ownership was totally out of reach for a much larger percentage of society than it is today
Why would I want to go into debt with a bank for thirty fucking years? Why does a bank get so much free money over that thirty years in the form of interest, for almost nothing? All they do is front the cash, and that’s it. Why does that justify so much free profit? Why is this the way it has to work?
Some of it is that it needs to be profitable to be a reality. If they gave you 300k and you paid back the exact percentage of 35years x 12 months each month they’d lose money.
Other parts are that you’re competing with their other opportunities.
It’s a necessary evil unfortunately.
What you should be asking is why can corporations own land. Residential land is for people only, that would lower costs and give more of a chance to the people.
Corporations owning land is the current way many young / low income people get housing.
Renting is cheaper for people that might move in ~5 years. Moving citys is an important way to gain income.
I think baning cooperate ownership of “residential land” would be another government handout to owners at the expense of renters. Id prefer policies that increase housing supply instead. For example, investment in nonmarket housing, and permitting reform favoring infill development.
I’m not banning landlords I’m banning vulture funds, pension funds, agencies, conglomerates, multinationals etc. from owning homes.
This makes for less competition in buying homes for those people, allowing for prices to stay realistic. So you can buy two houses if you want, though I’d tax the shit out of you for the second and subsequent houses.
Also if you weren’t competing with corporations rents would be lower, but you could buy a house and sell again in five years when you move on.
I guess i missunderstood you. As far as I’ve seen, vacancies are quite low in places where housing is scarce. Investment properties are usually rented out.
Closing costs are very high. It would be difficult to make housing cheap enough that the benifits to owning a home outweighs these costs. Also, you would need to sell the house quick, so that you don’t pay for two houses at a time. But if housing was no longer scarce, it would be hard to sell the house quick.
I cant imaging a future where it makes sense for everyone to own their own home. We should always consider renters when making public policy, even though they have little political power.
You might be saying this but you used some jargon I don’t know of.
The government can just build the goddamn rental houses, townhomes, and complexes. Remove corporations from the equation. Done.
By nonmarket housing, i mean housing that’s either own and run by the government, owned and run by nonprofits (probably funded by the government), or owned and run by coops.
In my part of the world, public housing is a bad word, (due to bad examples caused by government disinvestment) so I try to use other words.
Credit union
Credit unions still charge interest so I’m really curious what you’re trying to get at here …
Generally speaking they have way lower interest rates because they have financial incentive and legal requirements to raise their members credit/capital.
Because they take on the risk of what happens if you don’t pay it or default. They have to pay out a massive amount of money that they could have used for other investments, instead you become the investment and they just hope you’ll pay off, literally.
You don’t have to have the bank front you a loan though, you could just save up for 30 years and pay it all off with cash, but given the way housing prices are increasing, that seems to be a terrible plan. By the time you’ve saved up $150k for that $300k home, that home will likely be worth $450k lol. It’s better to get in early, lock in a rate (and refinance later), and start to pay off your mortgage now.
Risk. They take a risk when they give people money that they may be unable to recoup. At the same time it is money not liquid to use for other things.
Get a loan when interest rates are low and/or refinance when they go lower. Your alternatives are buying a house with cash or renting. I’m assuming cash is off the table, so let’s compare renting with paying off a mortgage, which can often have similar monthly payments. When you rent, you have fewer responsibilities, but you also have less control over your space and lose every penny of your monthly payment. When you own, you have more financial obligations eg repairs or upgrades, but you have more control over your space, and a portion of your monthly payment goes toward your principal, which becomes equity. That equity is yours if/when you decide to sell. If you want to pay off your mortgage more quickly than the amortization schedule and pay less interest, that is also your prerogative.
But paying rent is no different than paying interest on a home loan as far as your pocketbook is concerned, except you get to keep some of your home loan payment every month
The 30 year mortgage revolutionized hime ownership in the US. Before it existed, home ownership was totally out of reach for a much larger percentage of society than it is today
Also consider that most banks have free checking amounts. Those cost money.