Then there's all the expenses you didn't know about before you bought the house. If you don't have at least some DIY skills, you get to pay people a lot of money to fix things for you.
...BTW, the county just did a reassessment on your property and your property taxes have now doubled. In exchange, you get nothing. Congratulations.
Hey, I just did these things! Water heater i was ripped off, which cost me $2600, and the roof i actually thought was a good deal at 17k. Not fun but the roof made me happy. The water heater actually destroyed my basement by leaking out...
I'm guilty of ignoring my water heaters. Had my backup start to leak and it cost $1500 to replace. So I immediately bought a new anode rod for my primary tank. Drained/flushed it and replaced the old rod which was completely gone. It was an easy task but you will need a cheap impact wrench, 1 1/16" socket and chain link anode rod to make it easy.
It's something you need to do every couple of years. But I never do it.
And so now you've learned that you need to regularly flush the water heater and change out the anode rod every few years, right? I just bought my first house. Hot water wasn't working right. Heating element was dead. Why? There was so much scale that the lower element was covered in it. Replaced the element, flushed as much out as I could reasonably remove, and then flushed again six months later while replacing the anode rod. This keeps the corrosion at bay.
With new water heaters yes, do your maintenance. Old water heater that came with the place and hasn't been touched in years? Yeah, the advice is to actually not flush it because you don't know what cracks that gunk might be blocking up and it will be more likely to fail on you sooner.
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.
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?
That's true but when they double over 10 years and four schools in the area shut down due to "lack of enrollment"? Streets sure aren't any better and my neighbor who works for the city has only had COL raises for the same past decade?
Whats going on is decades of mismanagement of property taxes and city zoning. People fight tooth and nail to keep their property taxes low, and eventually the city has to do a big increase because they failed to increase incrementally. The bigger issue is how poorly we zone and design most north american cities.
The average car dependant suburb costs more to maintain than it generates in tax revenue. A denser area like mixed use neighbourhoods and "missing middle" housing fares far better and generates enough that it often ends up subsidizing the rest of the city, the same is usually true for denser downtowns. That trend is dying off as those denser areas demolish tax revenue generating businesses and homes to pave parking lots that don't generate taxes to park cars from the suburbs that don't generate enough taxes.
You can't afford a home because for decades suburbs were given a massive tax break while denser downtowns (guess where the poors have to rent and ultimately fund the property taxes) have to subsidize car dependant expensive to maintain subdivisions (which is usually for middle class or wealthier people, especially when built new). Add in some racial demographics and we've basically engineered every city to have secret tax cuts for anyone rich enough to get into the suburbs.
The best part is, many cities are keeping the cycle going because the only way they are paying for maintaince of an old subdivision is by using the devleopment taxes and fees from a new subdivision. This is not sustainable and ultimately equates to kicking the can down the road to let a future generation figure it out (which is literally as simple as building cities densely again, as they had been built for 100s of years).
This hasn't even touched yet on the urban sprawl, energy ineffeciency, and secondary effects of car dependancy that have all spawned from "the american dream" of suburbia. We seriously need to reconsider how we zone, build, and get around our urban spaces.
I agree with a lot of what you said but this is complete bullshit:
while denser downtowns (guess where the poors have to rent and ultimately fund the property taxes)
I have never been able to live in a "downtown" because I'm just a construction worker. So GTFO with "these poor inner city areas are funding the suburbs." I'm in one of the nicer houses I've ever managed to live in and it's primarily a shithole. You're telling me that the people downtown are subsidizing my white-trash ass? No way.
It depends on the city. Smaller non touristy cities. Your cheapest rents are near downtown core with all the old buildings and the only place density has been allowed to be built for the past 60 years. Bigger cities the central downtown is defintely expensive, i guess in those cities im more so refering to anywhere with apartment buildings density, which can give a downtown feel if older buildings are still preserved nearby. Although a lot of the time they've been paved over and thats how we get apartments that stand 20 stories high surrounded by a sea of single story strip malls and box stores.
See, it's the opposite here. In the nearby city (pop 90k), the downtown areas are hellaciously expensive because they're closest to amenities. The farther you get from grocery stores and bars, the cheaper it gets. It's so weird to me that there are places where living next to shopping is cheaper than living far from shopping. It doesn't help that the downtown apartments are being remodeled into luxe apartments and the suburbs and rural areas are where the affordable housing is being built.
The suburbs are cheaper, but you have to drive to do the shopping, and the rural areas are cheapest because everything smells like cow when it rains, and you have to drive to do the shopping.
Edit: My rural neighborhood is a combination of apartments, trailer homes, and detached housing, and it's more than a mile from groceries.
Yeah, I'm living rural because living in the city is still more than twice as expensive. Some bad faith actors want to reclassify it as 'suburban' because it's doubled in size since covid, but I'm closer to cows than the grocery store, so that falls flat.
Some places literally build cookie cutter subdivisions on a chunk of land in the middle of farms they bought so the classification may not be that far fetched depending on the circumstances. My parents house is technically zoned as agricultural yet the recent sprawl of nearby cities means there is now a mcdonalds less than 1km away and suburbs creep closer each year.
And I do think this is part of the rural angst that has taken root. The town started out as a farming town, with a vibrant community centered around agriculture, that is slowly getting replaced with boxes made of ticky-tacky. Combined with income stagnation being worse in outlying areas, there really is a sense of erasure that has no outlet.
Yes unexpected maintenance can sometimes be a huge problem, especially in the first couple of years, but after that you can tap into home equity and repair say a roof. Everything else while expensive is still cheaper than renting. Using the OP's example 1k vs 500, I can assure you you will never have consistent 500 repairs per month.
As for the taxes the people in my city nearly went ballistic when the city increased the rate by 5%. At the end of the year it costed me $200. Per month that's about $16. I've never lived in any apartment anywhere where rent didn't increase by at least $50 per month each year. Even if someone had a home twice as valuable that's still a very small monthly cost.
Additional once you get past the first 3ish years rent prices have greatly outpaced your mortgage and you will be saving a lot of money compared to of you were renting.
I'd like to wrap up with a question. If owning a home was such a sink of resources why do people become landlords?
Speaking to the post, I feel like there is a tipping point between OP and your points and the post is showing that. If you can convince the bank to loan you the money somehow you then start to build more capital which can pull you out of being “poor”. There are many variables and wildly varying degrees of this scenario, but once you start your ownership experience, some people can work it quite hard and build enough capital to own multiple residences and rent them out. (Those already in possession of capital are out of scope of OPs post.)
Rent is paying the landlord for everything every month. No repairs lately? Too bad, you’ll still pay for the possibility. The exchange is that you should never worry about repairs (or taxes) as the landlord handles everything. Once the landlord figures his margins are too tight, they raise the rent. Lots of variables here too and that makes blanket statements about which is better more difficult. I advocate home ownership, but I feel terrible for young people. Runaway greed by those that already had the capital has changed things. The young folks I know that are able to manage it all had help from relatives.
The act of convincing the bank and owning a home is getting more and more difficult. Impossible in many places and improbable in others without Herculean efforts. OPs post expresses this perspective.
I personally grew up quite impoverished and me and my wife did manage to get our home in medium COL area. We don't have exceptionally high paying jobs nor did we have any help from our families. We just made a lot of effort to build our credit. We're also not old at all under 30 to not dox myself too much.
A lot of people simply have some wrong assumptions about the amount needed to get a loan. We put down 3%, sure we didn't get the most competitive rate and our payment is higher, but it worked out to the cost of our then comparable rent. There's quite a few federal programs that ensure the opportunity for a low downpayment mortgage for first time homeowners.
But that was just slightly before interest rates went insane, kinda on the way up
In a previous life I was a mortgage loan officer at a broker. I bent over backwards helping folks get into those programs whenever possible. I was impressed with how little was needed when everything slotted in place in some cases. Glad it worked for you too!
after that you can tap into home equity and repair say a roof.
There's no, "tapping into home equity." There's only extending the mortgage with more debt.
20 years ago my sister did all sorts of home improvements that she said were free because she was "tapping into equity". Now she's nearing retirement and complains she still has giant mortgage payments.
I never said it was free and I never said it wasn't a debt. Like obviously it is a debt, anyone that reads "tapping into home equity" as meaning free money doesn't understand basic finance.
It doesn't have to extend your mortgage. You can take it out as a second line of credit as an additional loan to pay back monthly. Obviously the ideal would be to have the savings to cover necessary home repairs, but if you don't this is typically the cheapest way to get a loan to do necessary maintenance.
Sounds like your sister used her equity to refinance her loan and recieved a payout for the difference. That's going to restart your mortgage and is probably not the best way to go about accessing home equity.
So yeah don't take on reckless debt you can't payback. You can responsibly use your home equity for maintenance if you need to though.
Once again everyone knows that is debt. Of course it is debt. Once again if you don't understand that taking out a loan = debt you don't understand basic finance.
It just so happens to be the lowest interest form of debt you can take and even when added with an existing mortgage payment is still insanely cheaper than comparable rents for the same property.
My statement is "yes homes have maintenance and that can come at unexpected costs. However you can access low interest debt if you need to. And even if you do you'll still pay less than renting a comparable property for the same amount of time"
Please consider the whole and dont just take snippets out of context. Homes come with costs, still way cheaper than renting. You don't have to take out a loan for home maintenance. You can, but you don't have to.
One final note, debt doesn't necessarily have to be bad. You should never take on debt you cannot afford but if utilized wisely you can maintain cash reserves for emergencies and build your credit. Credit scores are made up bullshit, but it's a system that we're trapped in. With a better credit score you can get much better terms on certain things that we need to survive. It's better to take on a manageable debt that at least gives you some benefit than to dump your money into some landlords profit margin.
Rent is the most you will pay every month. The mortgage is the least you will pay every month.
I'm loving them being here as full grown adults and enjoy my time with them and with our particular house they are seeing that lesson play out in real time. Some big expenses and I am the DIY dude. I don't fuck with (big) electric or gas though, that shit can really backfire.
Rent vs mortgage - gotta put a caveat on that one.
Renting = landlord gets all the money but has to maintain the property.
Mortgage - bank gets all the money and you get a partial refund if you sell. You pay for the upkeep. A mortgage is not really an "investment", you usually lose money on the deal if you live there. It's cheap rent from the bank.
It basic math to see which one is better long term. Usually the mortgage wins because of of the partial return. However if you can't do the upkeep yourself, renting is often a better financial decision.
There have been times when renting was the smarter financial decision. Like the housing bubble in 2003-2007. You could rent places for 1/2 what it would cost to buy them per month.
Yeah, that's the thing. The market went upside down. Maybe 1993? Before that renting made sense even from a financial perspective in many areas. But now when housing is double or treble inflation? Nope. Sink money into real property at your first opportunity.
We have fucked up the entire "developed" world so much that if you start poor you stay poor and housing is a large part of that equation.
That decision is true today, but realistically your rent will grow much faster than your mortgage (plus escrow) payment, and your mortgage payment goes away.
Then there’s all the expenses you didn’t know about before you bought the house.
The cost of owning is significantly less than renting over the life of the unit. Repairs happen, but most of the time they aren't time critical, so you can budget out the repairs over months.
Unless the house was old when you bought it, you aren't going out of pocket on any big purchases inside the first years of ownership.
…BTW, the county just did a reassessment on your property and your property taxes have now doubled
Idk where you live, but most states limit the rate at which an acessor can raise your housing price. In Texas, the cap is 10%. So your property taxes can rise, but the won't double overnight.
You can also contest the increase. Harris has been fairly receptive to a simple "my neighbor's house sold for X so my house should be worth about X, not X+20%"
The cost of owning vs renting can be very different depending on where you live and work and the amenities you want access to. Renting somewhere centrally located with good access to high quality transit and other amenities would likely be cheaper than owning. Unless we can start normalizing owning apartments again. You could own for cheaper on the outskirts of downtown, but you'll likely be sacraficing access to some amenities by doing so.
Renting somewhere centrally located with good access to high quality transit and other amenities would likely be cheaper than owning.
I'd need to see an example. I've never heard of a place that was cheaper to rent than own after five years. The break point on rentals tend to be short term stays, and mostly because of the cost of real estate transactions themselves.
For public housing it can be cheaper. But that's never going to be a centrally located high-rise.
Also, the 500 is just the mortgage payment. It doesn't include the insurance and property taxes and, at least in the USA, private-mortgage-insurance (pmi) if the down payment isn't at least 20%.
The monthly obligation can easily be more than that 1000. The savings is in locking the first half in at a set amount.
Covid was the wake up call I needed to realize that while I understand the nuance many others need the point made for them to understand the point of the scenario. We understand Eleanor. Some understand Callum.
And while we're ranting about this, can we throw PMI and whomever came up with it on the bonfire where they belong?
Your telling me that I need to pay for you to have insurance in case I default while your also charging me interest who's very purpose is to offset risk? Why am I paying to offset your risk FUCKING TWICE AND HOW IS THIS FUCKING LEGAL.
Shit infuriates me. I want all the bankers to get William Wallace on live TV, recorded and played back once a year during a mandatory viewing window so that we never, ever, forget.
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.
If you have $1 youre not using you might let someone else use it if they incentivise you by giving you an interest in their need.
If you give $1 to 100 different people you might increase the rate for some of them to offset your additional risk, but thats not the purpose of Interest.
Ok, your loan has been determined to be higher risk therefore you have to pay more. Why did we need to invent a second payment called PMI instead of just charging a higher rate to higher risk borrowers? Why do interest rates need to remain "reasonable" ?
In Australia, some 60 years ago, banks wouldn't lend over 80% of the purchase price for a property.
The federal government created a government department to provide lenders mortgage insurance. It wasn't a free government service, but a good example of the federal government stepping in to do something private enterprise wasn't able to.
Since then of course that department has been privatised, like everything else, so private institutions provide that service now.
There do remain some differences between LMI and just simply extra interest. Notably LMI is a once off payment, and it can be included in the loan.
More recently, the Australian Federal Government has rolled out a scheme to pretty much abolish LMI. They're just going to guarantee the loans for free.
This is one of the reasons my wife and I took so long to get a house. I refused to pay this absolute SCAM. So we saved up to put 20% down. What a crock.
The alternative would probably be (much) higher interest rates until you get below 80% LTV at which point you're "allowed" to refinance...but no bank will ever remind you of this in hopes you forget...or prime will skyrocket and you'll be stuck in high interest for an unknown amount of time.
I think you should put away the monkey paw before they get more inspiration.
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
you're not gonna be able to afford this apartment after a few years of 10% rent increases, and we don't want the inconvenience of evicting you when that time comes
There's a rule of thumb that your rent / mortgage payments should only be 1/3 of your pre-tax pay. In expensive cities that's sometimes impossible to manage. But $1300 out of $2000 means you're spending 2/3 of your pre-tax pay on housing. If you're taxed at only 20% that means your take-home pay is going to be $1600. After rent you'd only have $300 a month for food, utilities, clothing, transportation, etc.
If I were a landlord and someone on $2000/month wanted a $1300/month apartment, I'd be asking questions too.
They don't actually need regular payments for 10-30 years. They need you deposit that down payment cash ASAP so they can lease it to billionaires and crypto exchanges.
the deposit is the keep young, inexperienced and glowy-eyes people from making commitments they don't have the stamina to handle.
it happens a lot that 20 year olds want to buy a house with their new partner that they think they're gonna be together with for the rest of their lives, only to have it all fall apart 5 years later. forcing to you save up a bit before actually buying the house means you go through a lot of experiences before you actually buy a house, which makes it more likely that you'll have the far-sightedness that's needed to actually buy a house. :)
The house you're buying is the collateral for their loan. If you took out a loan for 100% of the value of the house and are immediately unable to make payments, the bank then owns the house. For them to simply break even, they'd have to sell the house for more than you paid for it to cover the various costs (lawyers, agents, etc.) If the reason you're unable to make payments is that the economy crashed and housing prices tanked as a result, the bank couldn't hope to break even on their loan.
The down payment is basically a way to ensure that in the bank's worst case scenario they still don't lose money. In theory, the bigger the down payment, the lower the risk for the bank, and the better a rate you should get on the loan. Multiple banks should all be trying to be the one to give you a mortgage, and should be trying to compete by shaving their margins as tight as possible given their risk tolerance. Of course, it doesn't always work out that way, but there's a reason for what they're doing and it's not just to screw over their customers.
They can't really ensure a positive worst case scenario. 15% is the minimum down payment where I live unless you use extra collateral, but a home could lose half its value if there's a major economic downturn.
They're just mitigating bad scenarios, not anything close to the worst case.
There is no declining demand of human labour, and there is no indication that it will ever happen. The way the labour is performed is changing, just like it always does
I bought a 2 bedroom single family home in South Carolina last year for $86k with only $11k down, 7 minute drive from the city center of the capital city (Columbia). Mortgage is $480/mo. Cheap houses absolutely still exist if you're willing to live in areas where "nobody wants to live"
I went from an apartment that cost ~$1250/mo. To a mortgage that costs ~$4300/mo. Just got the "privilege" of owning a home (and paying for all repairs myself).
I can only afford this because of the people I'm sharing that cost with. We're all on the deed, and we all have a stake, and claim to, the house. Four of us.
My payment didn't really change.
The only way we could get to the point of a down payment is that one of the four of us has been saving for something like this since they were in highschool. Because of their effort, we had enough for a down payment.
And I'm lucky to be in this position.
What a fucking crock of shit.
Despite all of this, I'm hoping the market takes a dive so the rest of you can do the same at a much more affordable rate. I've already spent the money and I'll be spending years paying it off. I didn't buy a house up objectively save money, I bought a house for stability. I never want to move ever again. There are good reasons for that which I won't get into. I promise that I will have ZERO issues if you all get a better deal than I did. I hope you do, and I hope the housing market, specifically the rental/flipping/"income property" markets crash, hard.
In the same way, I've paid off my school debt, I'm in favor of school debt forgiveness. I also enjoy pretty good health, I'm in favor of universal healthcare. I've never caused, not been the victim of a fire, I'm in favor of fire departments.
In the same way, I’ve paid off my school debt, I’m in favor of school debt forgiveness. I also enjoy pretty good health, I’m in favor of universal healthcare. I’ve never caused, not been the victim of a fire, I’m in favor of fire departments.
That's commie talk son. We pull the ladder up behind us in America.
Right before we moved my rent had gone up to $2500 so it was a push. Now when we first started living there the rent was $1400 and the landlord had even refied so his mortgage was cheaper at the end. When we were moving out and he drove up in a brand new Rivian that I’m pretty sure I basically paid for…
To be fair, it's a pretty large home. I'm living with my SO, my brother and his wife and there's a couple of offspring that needed space too. Our house has ~5 ish bedrooms. Considering the number of people who live here, it can feel small. If it was just me and my SO, this would be humungous.
But that also means that we have four fully grown adults helping with the mortgage. So my share of the mortgage is around $1100 ish, per month, and we split most of the household bills, so I usually throw in about $400 more to help with that. I personally pay about $1500/mo.
My SO does the same, and we've encouraged my brother and his wife to also do the same. If everyone pays $1500 towards the house every month, we have more than enough to cover all the bills (electric/gas/water), as well as shared things like the Internet. Also that's enough to cover the house insurance.
Yeah that actually sounds a little better than me. I’m the main bread winner and I’m responsible for almost all of it. It can be a little stressful at times
Yeah, I went from $1200 rent to a $1300 mortgage but the city added $50k more value to the assesment so between taxes and insurance it's going up to $1700/mo next year so that's fun. I don't know how many more years of that I could afford cuz $2600 just isn't doable for me :/
The first time I applied for a loan, I didn't have a credit card yet. And they were like:
How can we know you're responsible with money?
Because I haven't needed credit in the past and I'm still alive, idk? Having enough liquidity to not need credit would seem to suggest I'm good with money.
They are NOT looking to see if you are responsible with money. They are looking to see if they can make money off of you, so they want you to be a heavy credit user. Before I bought my house I made sure to take out two credit cards and just buy random shit on them for a few months because that boosts my credit score drastically which then made it easy to get the loan. Banks HATE people with limited debt because it means you are not a loyal customer that they could make money off of. Yes, it makes no sense but that's just how the economy works. Even if you don't have any reason to buy things on credit, you still should. Even if you are very financially responsible, you should always have "stupid debt," by that I mean debt for the sake of debt, because banks love that shit and it'll help you out if you ever actually do need a loan for something.
Because people that quickly pay off their principal and avoid accruing interest don't make the Credit Card companies as much money. They prefer people that are bad with money, sort of like how police departments don't accept applicants that do too well on the tests.
But it's plausibly deniable enough because you can still get decent credit score if you pay off your credit before you pay interest. It's a numbers game for them, I expect, but still.
Considering how much data they can get on anyone, this process seems pointless and outdated, except to give them somewhat arbitrary power over who can get a loan.
Not that I like such private data to be available at any institutions fingertips, but so it is these days.
Going to be wild when people just give up on society and just start eating the ruling and ownership class. I tried warning these assholes if they didn’t give something. Then they would doom their existence. And now you have more people radicalizing everyday because they are being put on the streets.
Well shoot. Why wasn’t this the case from the start? I’ve only ever had troubles with payments a few times in the 10 years I’ve been renting. Good thing none of that counts for anything and the clock is just now starting.
Yeah, and I think it's not about history, it's about mortgage initial payment, which is some% of target property cost.
And the idea that it's bad thing is just stupid. Anyone read about previous housing bubble remembers how people took multiple mortgages because you could let your house for more than you pay for mortgage per month, and as crisis hit, they couldn't repay. It was very much enabled by zero mortgage initial payments.
That's just for the "paid on time" section of your report. It helps a bit with your score, but it doesn't change how banks determine your debt to income ratio.
Yes, Experian (a company that has had multiple data breaches) is now allowing you to give them more of your personal data for free, and in return they will add your Netflix and Xfinity payments to your credit report.
And then the banks that consider your loan will still do the same process they did before — i.e. not consider your Netflix and Xfinity payments.
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.
Same shit happening in Scotland. Knobheads makin bids above asking price on slum complexes in the city like it's fooken millionaire row. Last landlord I had chucked a new tenant out and returned her deposit for complaining about the broken shower basin cos he cannae be arsed. Not exaggerating.
It's mad given that Scotland technically is quite pro-renter. You just can't enforce anything so landlords have learned not to give a fuck. A friend viewed a tennament they were trying to let with no kitchen (as in no cooker fridge or sink). Like something out of trainspotting.
I never thought I'd end up at a place in life where I worry about real estate valuations, but here we are. In my condo building, things are getting decrepit. I wondered why no one else seemed to care then I realized I'm in the minority of owner-residents, every one else rents out, so they don't care about how it looks. They just care about rents coming in.
Then I wondered why they don't care about losing value, then I realized, no one is losing value, some units here sell for the same price as a single-family home in the suburbs, even with the graffiti and homeless people wandering the street.
To be the devil's advocate here. Rental payments vs mortgage payments is not an accurate comparison of the true financial burdens.
With many rentals some if not all utilities are included in the price of rent, whereas homeowners must pay the full cost of utilities. There is also the additional cost of home insurance and property taxes. Most rentals have the majority of their maintaince covered whereas the homeowner is responsible for lawn cutting, gutter cleanings etc. The cost of repairs and maintaince is not negligible. While renting if the heat quits or an appliance breaks, the landlord is supposed to cover the cost but owning means you must take that full cost.
In the posted example, having double the mortage payment in rent payment is probably adequate to cover the additonal costs but the comparison of renting vs owning is not black and white. Several financial managers have even studied that depending on your needs and income, you can actually be getting ahead financially by renting if you don't actually need the full benefits of owning and are able to maintain a store of wealth through other investments. This is especially true if you are in a rent controlled unit.
It seems like you are assuming an apartment rental and not a home rental. In my experience home rentals work very differently. Utilities are not included and you do end up paying quite a bit to maintain the home.
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.
Lenders are not your friends. They'd take your organs as payment if they were allowed. The rules are there to stop them doing bad lending and then hounding you to your death.
Is it a thing to find German mortgaging standards whacky?! I finally feel heard! Basically everyone here seems to pick up 35+ year mortgages with seemingly low monthly expenses, but the overall amount of interest they accumulate over that time is absolutely insane! And still, everyone says that you shouldn't pay more than 30% of your monthly income into your mortgage. It's hard to even find a bank that allows you to pay for a decent Sondertilgung each year. And don't even get me started on that whole Bausparvertrag system, because I have no idea what is going on with it or why anyone would ever do that
Yeah that was my experience as well. Mortgage companies were happy to pre approve me up to like 75% of my monthly income. Not even close to enough to buy even cheap food.
I saved up a big (to me) chunk a few years ago, thought I was there. Expected the red carpet to roll out. Nooooope. There were people buying houses for $100k more than the asking price, sight unseen, within a week or two of the house being listed. My little $40k deposit was adorable, in comparison. I had no chance. Then Covid, life, etc...
Was it in a desirable location? Our tourist town went out of control with our of state buyers during the pandemic, but property values have adjusted back some and the market competition is gone. If you still have some of that $40k now might be a better time. My wife and I just did the federal First Time Homebuyers class and wound up getting a USDA rural development loan, they wouldn't even let us put a down payment to lower our payments.
I am a skidmark that cannot believe that I live in a house that I "own"(have a mortgage). And I am so much less pessimistic about anybody's potential to do what I did. I am happy to answer some questions. I make $22 an hour and my wife makes $17, the loan officer told me I almost make too much for the program.
The 100k+ over asking was the big deal because that never made it into the housing data properly so prices looked like they were lower than they were and we don't have accurate comparison data now
Yeeeeah, I was too adult in 2008 to go "you know the real problem? We check too hard for solvency when giving out mortgages".
Not that I have a silver bullet for solving a housing crisis. There probably isn't one. You need a lot more public housing as a percentage of the total pool, that much I can tell. How you fix a job market where nobody holds the same position for more than a handful of years is beyond me. You probably need to make it much more expensive to own a house without living in it or renting it out. You definitely want to make it much more expensive for corporations to own housing.
Guessing that's harder to fit in a pithy, viral tweet, though.
The biggest thing we can do for the housing crisis is making density legal again and allocating more space in cities to housing instead of parking cars.
Yeah, that'd work a lot better for me if I was American and not painfully aware of similar issues happening in cities where cars fold like umbrellas and are almost entirely parked underground.
I mean, don't get me wrong, you guys have a whole continent you can use for this, so maybe you can brute force it. Definitely not "the biggest thing" where I'm from, though.
I'm glad someone mentioned the 2008 financial crisis. Banks need to be fairly confident the person they are giving the mortgage to can afford the payment now and for the next thirty years. There are plenty of unfair reasons why someone may not be able to buy a home today, but not being able to afford a down payment is not one of them.
I hate to break it to you, but mortgage payments are not cheaper then rent anymore. Obviously depends on your mortgage and money down and all that, but if you expect to pay half as much for mortgage payments as you did for rent, you're going to have a very bad time.
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.
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
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.
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.
You can't even get an apartment here without making a ton of money. Cheapest studio apartment here is $1,500 a month. I have to prove i make $4,500 a month just to barely qualify, which i don't. Then they charge you so much for application fees, and then utilities they overcharge for, it's all a scam.
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
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.
You’ll be $50k better off if you just stop paying and let the bank foreclose.
And do what? Live under a bridge? You would still have to buy a new house. Are you going to find similar house at $600k easily? Are interest rates still low despite market collapse? Will banks lend you money if just foreclosed?
I'm not providing advice regarding what someone ought to do when they find themselves in negative equity.
I'm explaining the requirement for buyers to start with a reasonable amount of equity.
Once an owner falls into negative equity, they have an incentive to default on the loan. Yes there will be consequences, but the fact remains they will he weighing those consequences against the financial incentive to default.
The "better off" in my comment is an impartial objective calculation.
But what you're saying is simply not true. Where I live you have to provide 20% of equity to get a mortgage but you can't default when the prices go down. No bank offers mortgage covered in 100% by the house. If you owe the bank $600k you owe then $600k, that's it. If you default and you're house now only costs $500k you still owe them $100k.
So the 20% requirement has nothing to do with negative equity protections. It's to limit the banks exposure in case you're unable to pay.
I don't know how this works in US but where I live when you owe bank money they will simply garnish your wages and benefits. No one is defaulting on their mortgage to save money. That's just not a thing. I personally know people who were paying their mortgages for many many years even though their house was worth way less then the mortgage. You just suck it up and hope the price will eventually go up. If it doesn't it's still better then living on the street.
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?
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.
Declaring bankruptcy would only be beneficial if the housing market fully crashed and it went down in price significantly and you don't think it'll be going back up within the next few years.
Not to mention it'll be a lot harder to get a house in the future if you did that, and you'd get all the other downsides of bankruptcy as well.
Not to mention, this is all under a stay that assumes you'd actually be able to buy a house without a significant deposit.
Under the current system, it'd be an even bigger setback because if the house did lose a lot of value, now you're also out a huge amount of money, still have to pay the full loan anyway, and it might take years to save up enough again to get a future house.
Basically, the banks are operating more as insurance gamblers now than they are lenders, because no matter what they win big. Even though banks should primarily work as centralized financial institutions rather than businesses, because otherwise they cause huge ramifications for the economy.
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.
I think most of the people disagreeing with the post are from the USA, which has completely different costs/taxes/prices etc.
In the UK (as the original post is), it depends where you live - our mortgage is about £350 per month (5 bed terrace), but if would have been almost £500 a month without the deposit. Rent in the area is about £600 - £1500 per month, for similar or smaller properties.
Note that this is in Northern UK, in the sort of town sometimes described as "a bit of a shithole". I could get a train to a town an hour away and the prices would literally double - but the ratio between mortgage and rent would be pretty much the same.
Even with the cost of repairs, and a tiny bit on insurance etc, it's a significant saving. Also, the repairs actually get done, which was not the experience I had in rented accommodation.
Definitely not as low as £500… but mortgages are generally cheaper, sometimes much cheaper than rent. Example: we own a 5-bedroom house with a mortgage of $1,900, my step-son just moved into a 2-bedroom apartment for $2,200 rent.
I was paying $3,300/mo rent back in 2020. Got a mortgage at the low rates of 2021 and got a $2,800 monthly rate. So it seems like it's cheaper. But once I add the property tax ($1,000/mo), HOA ($500), home insurance ($300), it's not at all cheaper to own than to rent. Plus paying for maintenance on our own (had to replace both the fridge and the washing machine in the time since we moved) adds up too. Not saying it was better to rent, but it was definitely cheaper.
Our home insurance and property tax are escrowed and included in the $1,900. And no HOA. But the maintenance is real, something is always breaking. Had to buy washer and dryer, replace the stove and the dishwasher. I would still much rather own than rent though.
£100,000 over 30 years at 4.5% would be £506 a month. That plus the stipulated £25,000 deposit will get you a bungalow or terraced house near me as of about 18 months ago. Rent in my area starts at around £700 for a house outside of town or a single room in town.
So yes, £500 mortgage is possible. Rent being twice the cost of a mortgage for a similar property is fairly common. Banks and landlords being shitheads is guaranteed.
My actual mortgage payment is probably just under $500. Taxes and insurance just put it at about $1000. I bought a nearly crack den quality fixer upper about 6 years ago in a moderately low COL area. In the truely low COL areas I imagine you might still be able to manage the same pricing today. It's probably doable, just not anywhere most people want to live or with a house that doesn't have a bunch of issues.
"in any country" took it too far, since there's places where you can basically buy a house outright for that amount. "Western/first world" wouldn't even cover it I don't think, with Italy and eastern Europe being a thing. Even in my very expensive western European country our mortgage isn't that much higher than that (we kinda lucked out), but of course once you account for all real expenses it is.
I mean, imo people should be allowed to buy a piece of land and then live in a tent there as long as they arent dumping raw sewage on the ground in a metro area. But you can't do this almost anywhere due to a number of factors which aren't capitalist, so much as they are just bad ideas. Eg, minimum lot sizes, which mandate you must buy a lot of land, rather than only the amount you need. Or setback requirements, which mandate that you waste a substantial portion of that land, increasing the incentive to buy more land so a larger percentage is useable. Or absurdly low maximum occupancy limits (eg, in my city it is illegal for more than 2 unrelated people to live in the same home). Or sfh zoning, which restricts dense housing development to an absurdly small portion of land. Or using property taxes rather than georgist land value taxes, which allow speculators to sit on land indefinitely, waiting for the value to go up, rather than selling it to someone who would put it to good use. Or auto oriented infrastructure, which ensures that you will have to own a car to get from one part of town to another.
Remove these barriers, and basically everyone would be able find an apartment to live in, or can buy a small patch of land. On these small patches of land, individuals could start living rent free with just a walmart tent, a jug of water, and a 5 gallon bucket to poop in. Homelessness would be solved almost overnight, and it would cost basically nothing. From there, individuals unburdened of the need to pay rent or mortgages, could save money to put towards paying the city to install water, sewer, and electric infrastructure; pour home foundations; build framing, roof, and siding; etc. And once a minimal home was built, they could build additions over time, also without taking out loans.
This process would replicate the way cities were traditionally built for the last 5000 or so years, and after about 30 years or so, we would start to see these areas become some of the most attractive and desireable parts of our cities.
I would agree. Or really, those banks shouldn't have existed in the first place in that form - a "too big to fail" institution should be broken up before they can fail with a prudent economic policy.
That's not the point, and I can't tell if you're being genuine or arguing in bad faith. Do you want me to take the time and effort to explain why what you said is capitalist BS? I'm happy to if you're genuinely interested in learning.
Boomer parents: emotionally abuses you for your entire childhood/teenhood
Me: Has severe depression
Boomer parents: "WHY ARE YOU SO LAZY AND UNGRATEFUL, USELESS EATER, BURDEN ON SOCIETY" then proceeds to threaten to leave me out of the will.
Funny thing is, she also threatens to leave my older brother out of the will. Basically she tries to make us hate each other, and we do hate each other. My entire family is dysfunctional. They are all conservatives, racists, LGBT+ phobic, has the toxic masculinity mentality, ableist af. They think anyone with a slight disability deserves to get executed because its "a waste of resources". This is why I dislike my ancestral homeland, it reminds me of hatred and intolerance.
Edit: Technically they aren't boomers, but I'll still call them boomers because they share that same boomer mindset.
I am coming to realize that my rural perspective is pretty different, and that lots of people live in way higher cost of living areas than I do. My biggest suggestion is if you don't like expensive housing, get out of the city.
This really isn't as easy as it sounds. Moving means you lose your support system of friends and family etc. Some people have children and need the grandparents to help watch them during the day as just one example. Job opportunities are likely not the same. While their current city job may not pay a lot the opportunities from that job could lead a lot higher but of course life choices can be a gamble. On top of all of that, moving long distance is difficult and expensive.
I have a highly intelligent friend from a small southern town and he moved out of there because he recognized there weren't any opportunities for someone with talent but no capital. Sure he could have stayed and bought a cheaper house but he'd still struggle to make the payment on his small salary.
You realize the headquarters of Walmart are in Arkansas? There are plenty of very high paying jobs in significantly more affordable places. Also if you pay 1/4 less for a house, and add daily childcare it's still gonna be cheaper.
People literally do it all the time, the whole concept of the suburbs was created so that people could afford houses.
I moved to the small town. I'm a college drop out, there's always labor in the country, and I guess I just don't want as much from life as other people. I'll be happy working maintenance the rest of my life of it keeps providing.
This is an unpopular take, but that is reality. It really is affordable out here! If you want more income, learn to repair reliable japanese beaters and commute a little. It's less busy than the city, and it may bore some, but it keeps the bills paid, the kids fed, and the 401k growing.
Very dependent on the field. A lot of jobs are concentrated in a handful of major cities, mostly very HCOL but with high salary. That's why remote work becoming bigger partially caused the housing surge nationwide.
There are a number of people that have a home in the country with their family, and they travel to the city to work. Sometimes they are homeless during the work, or rent a small room.
No, it is not the ideal solution, but it is a solution. Fixing the housing situation is beyond most people's power, and it will take a long time for those trying to fix it to actually fix it.
Are you really confused why those properties are expensive? Those are both desirable locations in regions with quickly growing populations. How about Livingston, or Butte?
I am as there isn’t anything here. Cows and mountains. I am staying here passing three and it’s just nothing. Normally you would get water front and community features to set the price but none of that is here. I guess the confusing part is what is attracting people here. It can’t just be the mountains.
I know that it is why why would you be entitled to own a home just because you can make rent payments? Do you think the bank should give you a mortgage with $0 down? There are enough people buying who can save a down payment just fine
Given the figures are in pound sterling, quite often in the UK the mortgage payments are signficiantly lower than renting, 100% makes sense when in the context of the British housing market.
Mortgage payments are almost universally lower than rent payments. With rent, you're paying for upkeep, maintenance, administration, a profit margin and the landlord's mortgage.
While renting in some markets can be cheaper than typical mortgage for comparable homes, the amount indicated seems a bit insane.
So either he is in a crazy real estate market, or there's some additional context that makes it a poor comparison (going from renting in Virgina to Mortgage in San Francisco, going from a 1500 qt ft townhouse to a 3000 sq ft detached house with a quarter acre of land, or going for a 10-year mortgage). Or he's just making it up or exaggerating because it's the internet.
Interestingly enough that $4500 is pretty much exactly what it would be with 20% down on a $500,000 house for a 10-year mortgage. Of course, I'd expect such a house to rent for about $2700 rather than $1900. I could easily imagine he was renting a 2000 square foot 3 bedroom for $1900 and moving to what seems 'slightly better' 3000 square foot 3 bedroom with an extra special room or something, seeing that the 10-year mortgage is much cheaper in the long haul and going for it despite the huge monthly payment in the short term.
It depends on the market. Around here is similar, the market rental rate for a house is lower than what even the most lowest realistic monthly mortgage payment would be, but only by about 10% or so. I don't know if you also dramatically upgraded your home quality.
Not too long ago around here it was the same as the post, renting higher than mortgage.
Even then over long term, the mortgage would make sense, since you can sell and get back some of the money and your principal and interest won't magically get bigger because of market conditions.
In a sane world renting should be a touch cheaper than mortgage over the first few years, with tenants that only plan to be there 2 or three years. The owner gets a little income while taxes and insurance get paid and their asset maintained, and the tenant gets an easier and cheaper house to move in and out of for a short term living arrangement. Problem being when the market is upside down and when tenants are stuck never being able to build equity.
Well you made a choice. Either you knew you could make the payments for the price range you bought into, or you didn't read the repayments figures on any of the documents the bank sent you and made a massive decision uninformed.
I pay 20% more for my mortgage than I did on my rent, but the house is also better, I can easily afford it, and I made that choice willingly and I'm happy with that arrangement.
The bad take I was referring to was OP claiming the mortgage payment would be lower than the rent payment. In the US this is almost never the case. Edit: we have fixed rate mortgages in the US. My payment will only go up because of taxes or insurance.
Most countries have fixed-rate mortgages. Most rental properties are also mortgaged. So a renter is paying for maintenance/insurance/tax costs, the landlord's profits margin and the landlord's mortgage.
If the landlord has a 10-year mortgage they just took out, the rental market wouldn't cover that, because that landlord is competing with comparable properties that didn't choose that amount. They are also competing with people that bought the property a decade ago and don't have the same mortgage burden. They are also competing with some that even considers their accumulation of equity a component of their wealth and wouldn't mind being mildly underwater early in their loan for the long term advantage.
At least in my area, the way the real estate market has worked out is that renting is about 10-15% lower than monthly expense for a 30-year purchase after 20% downpayment. If the real estate bubble pops, that will probably flip back around, but for now, the renters are getting a discount for short term, which in my opinion is the way it should be, renters getting a bit of a break for their equity disadvantage. In a sane market, the renter gets a cheaper payment that makes financial sense for 2-3 years in a property rather than being forced to rent by an owner class making new ownership impossible.
All rents cover mortgage, taxes, insurance, upkeep, and usually a percentage profit on top of it all. Unless your lord is renting to you at cost or below (in which case they're losing money (not counting equity)), then there is no way the cost to rent would be higher on an equivalent property.
Like just imagine if you wanted to rent out your property for $1900/mo - you couldn't do it.
In my local market, a house that would be about $2700/month in mortgage/insurance/taxes on a 30 year term after a huge downpayment would rent for about $2400/month right now.
There are some owners that in fact do count the equity, so they are willing to buy higher and be upside down compared to what a mortgage could be. The recognize the rent is only part of the income, that the property value going up is a potential gain to cash in that's worth a few hundred a month to 'deposit'.
Especially if the owners can pay cash and not incur the interest associated with a mortgage. It's a bit of an odd choice right now as just letting the cash sit in a savings account offers competitive ROI with the current interest rates, but you've got a lot of property bought under previous conditions.
This only holds for relatively short term though, you'd expect rent hikes to go to $3000/month within a time period where that ownership monthly payment might only go up to $2800/month due to taxes and insurance rates. So 10 years into living somewhere you are now paying more to rent it than you would be if you had purchased comparable, even ignoring the equity part of the equation. If you include equity, then you better be planning to get out in 2 or 3 years at the most if you are embarking on renting, otherwise it's much much better to buy even with higher mortgage payment, since you can cash in on the equity if you need to, eventually.
I'd say this is a relatively sane fiscal model of renting, that you need to give the renters a discount reflecting their lack of equity. I'm kind of glad to see rental rates being below mortgage rates in my area right now. That said, it wasn't too long ago that rental rates in my area were higher than what mortgage could be, but large companies bought up housing stock and made it supremely difficult to actually buy as a private party. With the interest rates jacked up, those companies are cooling it a bit since they don't have access to 'free money' anymore.
My old house went up over 400k between 2019-2025. So, if I'd sold it in 2019, they could absolutely afford to rent to me at a lower price than if I tried buying it again.
Yeah that's the vagaries of the housing market and valuation, which is why I said equivalent property.
There's also no reason you couldn't sell that house for 400k less. The value is just the value. It's going to be the same whether you're renting or paying the bank for the same property.
I also won big by buying prepan, but who's up or down in the Canadian housing lotto doesn't change the physics of paying a lord's mortgage costing more than if you were paying the bank's mortgage directly.
Nevermind that whoever gets to be lord keeps the equity.
I think the point is that properties on market are, as a rule, not very recently purchased with a 30-year mortgage. So the monthly cost now required to cover the owners costs may be based on financial conditions from 6 years ago. If the rental market has a lot of properties that have been held a while but house values have rocketed, then you have a critical mass of owners willing and ready to out-compete brand new mortgage rates even if they ignore their equity advantage.
In my area, that's what we see, real estate prices are dramatically up as are interest rates, so mortgage cost to acquire is a fair amount above the going rate to rent comparable properties. Someone getting a 30 year mortgage to rent out a property would be underwater for very many years in the current market conditions around my area, as they have to compete with more aggressive owners that have had their properties for many years.
Ah yes, I could see that situation arising, although frankly I'm as surprised to hear of landlords competing for tenants as I would be to hear of them selling their properties for under market value. Not that I'm doubting your honesty--it's just not been my personal experience.
I've heard too many personal anecdotes of landlords trying to hike up rates by seeking spurious evictions, or refusing to install climate control, for tenants who are getting a "good deal" at lower rates. Maybe there are rational markets out there, but I don't personally hold out much hope for landlords to be reasonable in the face of the dual pressures of fear and greed.
Then there's all the expenses you didn't know about before you bought the house. If you don't have at least some DIY skills, you get to pay people a lot of money to fix things for you.
...BTW, the county just did a reassessment on your property and your property taxes have now doubled. In exchange, you get nothing. Congratulations.
Yup. Oops, you need a new roof and a water heater, that will be $34,000.
Hey, I just did these things! Water heater i was ripped off, which cost me $2600, and the roof i actually thought was a good deal at 17k. Not fun but the roof made me happy. The water heater actually destroyed my basement by leaking out...
I'm guilty of ignoring my water heaters. Had my backup start to leak and it cost $1500 to replace. So I immediately bought a new anode rod for my primary tank. Drained/flushed it and replaced the old rod which was completely gone. It was an easy task but you will need a cheap impact wrench, 1 1/16" socket and chain link anode rod to make it easy.
It's something you need to do every couple of years. But I never do it.
And so now you've learned that you need to regularly flush the water heater and change out the anode rod every few years, right? I just bought my first house. Hot water wasn't working right. Heating element was dead. Why? There was so much scale that the lower element was covered in it. Replaced the element, flushed as much out as I could reasonably remove, and then flushed again six months later while replacing the anode rod. This keeps the corrosion at bay.
With new water heaters yes, do your maintenance. Old water heater that came with the place and hasn't been touched in years? Yeah, the advice is to actually not flush it because you don't know what cracks that gunk might be blocking up and it will be more likely to fail on you sooner.
As long as you didn’t get a rental water heater, you did not get fucked.
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.
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.
Ooof.
I wouldn't say you get nothing from paying property taxes.
That's true but when they double over 10 years and four schools in the area shut down due to "lack of enrollment"? Streets sure aren't any better and my neighbor who works for the city has only had COL raises for the same past decade?
c'mon... something is going on.
Whats going on is decades of mismanagement of property taxes and city zoning. People fight tooth and nail to keep their property taxes low, and eventually the city has to do a big increase because they failed to increase incrementally. The bigger issue is how poorly we zone and design most north american cities.
The average car dependant suburb costs more to maintain than it generates in tax revenue. A denser area like mixed use neighbourhoods and "missing middle" housing fares far better and generates enough that it often ends up subsidizing the rest of the city, the same is usually true for denser downtowns. That trend is dying off as those denser areas demolish tax revenue generating businesses and homes to pave parking lots that don't generate taxes to park cars from the suburbs that don't generate enough taxes.
You can't afford a home because for decades suburbs were given a massive tax break while denser downtowns (guess where the poors have to rent and ultimately fund the property taxes) have to subsidize car dependant expensive to maintain subdivisions (which is usually for middle class or wealthier people, especially when built new). Add in some racial demographics and we've basically engineered every city to have secret tax cuts for anyone rich enough to get into the suburbs.
The best part is, many cities are keeping the cycle going because the only way they are paying for maintaince of an old subdivision is by using the devleopment taxes and fees from a new subdivision. This is not sustainable and ultimately equates to kicking the can down the road to let a future generation figure it out (which is literally as simple as building cities densely again, as they had been built for 100s of years).
This hasn't even touched yet on the urban sprawl, energy ineffeciency, and secondary effects of car dependancy that have all spawned from "the american dream" of suburbia. We seriously need to reconsider how we zone, build, and get around our urban spaces.
I agree with a lot of what you said but this is complete bullshit:
I have never been able to live in a "downtown" because I'm just a construction worker. So GTFO with "these poor inner city areas are funding the suburbs." I'm in one of the nicer houses I've ever managed to live in and it's primarily a shithole. You're telling me that the people downtown are subsidizing my white-trash ass? No way.
You’re both right which is what’s so fucked.
It depends on the city. Smaller non touristy cities. Your cheapest rents are near downtown core with all the old buildings and the only place density has been allowed to be built for the past 60 years. Bigger cities the central downtown is defintely expensive, i guess in those cities im more so refering to anywhere with apartment buildings density, which can give a downtown feel if older buildings are still preserved nearby. Although a lot of the time they've been paved over and thats how we get apartments that stand 20 stories high surrounded by a sea of single story strip malls and box stores.
See, it's the opposite here. In the nearby city (pop 90k), the downtown areas are hellaciously expensive because they're closest to amenities. The farther you get from grocery stores and bars, the cheaper it gets. It's so weird to me that there are places where living next to shopping is cheaper than living far from shopping. It doesn't help that the downtown apartments are being remodeled into luxe apartments and the suburbs and rural areas are where the affordable housing is being built.
The suburbs are cheaper, but you have to drive to do the shopping, and the rural areas are cheapest because everything smells like cow when it rains, and you have to drive to do the shopping.
Edit: My rural neighborhood is a combination of apartments, trailer homes, and detached housing, and it's more than a mile from groceries.
Yeah, I'm living rural because living in the city is still more than twice as expensive. Some bad faith actors want to reclassify it as 'suburban' because it's doubled in size since covid, but I'm closer to cows than the grocery store, so that falls flat.
Some places literally build cookie cutter subdivisions on a chunk of land in the middle of farms they bought so the classification may not be that far fetched depending on the circumstances. My parents house is technically zoned as agricultural yet the recent sprawl of nearby cities means there is now a mcdonalds less than 1km away and suburbs creep closer each year.
And I do think this is part of the rural angst that has taken root. The town started out as a farming town, with a vibrant community centered around agriculture, that is slowly getting replaced with boxes made of ticky-tacky. Combined with income stagnation being worse in outlying areas, there really is a sense of erasure that has no outlet.
I like that metric
Hello, fellow strong towns enthusiast!
Depends where you live. Where I live we just get more funded cops to more expensively harass houseless people.
I always find this to be such a poor argument.
Yes unexpected maintenance can sometimes be a huge problem, especially in the first couple of years, but after that you can tap into home equity and repair say a roof. Everything else while expensive is still cheaper than renting. Using the OP's example 1k vs 500, I can assure you you will never have consistent 500 repairs per month.
As for the taxes the people in my city nearly went ballistic when the city increased the rate by 5%. At the end of the year it costed me $200. Per month that's about $16. I've never lived in any apartment anywhere where rent didn't increase by at least $50 per month each year. Even if someone had a home twice as valuable that's still a very small monthly cost.
Additional once you get past the first 3ish years rent prices have greatly outpaced your mortgage and you will be saving a lot of money compared to of you were renting.
I'd like to wrap up with a question. If owning a home was such a sink of resources why do people become landlords?
Speaking to the post, I feel like there is a tipping point between OP and your points and the post is showing that. If you can convince the bank to loan you the money somehow you then start to build more capital which can pull you out of being “poor”. There are many variables and wildly varying degrees of this scenario, but once you start your ownership experience, some people can work it quite hard and build enough capital to own multiple residences and rent them out. (Those already in possession of capital are out of scope of OPs post.)
Rent is paying the landlord for everything every month. No repairs lately? Too bad, you’ll still pay for the possibility. The exchange is that you should never worry about repairs (or taxes) as the landlord handles everything. Once the landlord figures his margins are too tight, they raise the rent. Lots of variables here too and that makes blanket statements about which is better more difficult. I advocate home ownership, but I feel terrible for young people. Runaway greed by those that already had the capital has changed things. The young folks I know that are able to manage it all had help from relatives.
The act of convincing the bank and owning a home is getting more and more difficult. Impossible in many places and improbable in others without Herculean efforts. OPs post expresses this perspective.
I personally grew up quite impoverished and me and my wife did manage to get our home in medium COL area. We don't have exceptionally high paying jobs nor did we have any help from our families. We just made a lot of effort to build our credit. We're also not old at all under 30 to not dox myself too much.
A lot of people simply have some wrong assumptions about the amount needed to get a loan. We put down 3%, sure we didn't get the most competitive rate and our payment is higher, but it worked out to the cost of our then comparable rent. There's quite a few federal programs that ensure the opportunity for a low downpayment mortgage for first time homeowners.
But that was just slightly before interest rates went insane, kinda on the way up
In a previous life I was a mortgage loan officer at a broker. I bent over backwards helping folks get into those programs whenever possible. I was impressed with how little was needed when everything slotted in place in some cases. Glad it worked for you too!
There's no, "tapping into home equity." There's only extending the mortgage with more debt.
20 years ago my sister did all sorts of home improvements that she said were free because she was "tapping into equity". Now she's nearing retirement and complains she still has giant mortgage payments.
I never said it was free and I never said it wasn't a debt. Like obviously it is a debt, anyone that reads "tapping into home equity" as meaning free money doesn't understand basic finance.
It doesn't have to extend your mortgage. You can take it out as a second line of credit as an additional loan to pay back monthly. Obviously the ideal would be to have the savings to cover necessary home repairs, but if you don't this is typically the cheapest way to get a loan to do necessary maintenance.
Sounds like your sister used her equity to refinance her loan and recieved a payout for the difference. That's going to restart your mortgage and is probably not the best way to go about accessing home equity.
So yeah don't take on reckless debt you can't payback. You can responsibly use your home equity for maintenance if you need to though.
Second line of credit or mortgage, its still debt. The two are equivalent because you could also make more mortgage payments to pay it down quicker.
Your suggestion translates to "Don't worry about home repairs, just take on more debt to pay them."
Once again everyone knows that is debt. Of course it is debt. Once again if you don't understand that taking out a loan = debt you don't understand basic finance.
It just so happens to be the lowest interest form of debt you can take and even when added with an existing mortgage payment is still insanely cheaper than comparable rents for the same property.
My statement is "yes homes have maintenance and that can come at unexpected costs. However you can access low interest debt if you need to. And even if you do you'll still pay less than renting a comparable property for the same amount of time"
Please consider the whole and dont just take snippets out of context. Homes come with costs, still way cheaper than renting. You don't have to take out a loan for home maintenance. You can, but you don't have to.
One final note, debt doesn't necessarily have to be bad. You should never take on debt you cannot afford but if utilized wisely you can maintain cash reserves for emergencies and build your credit. Credit scores are made up bullshit, but it's a system that we're trapped in. With a better credit score you can get much better terms on certain things that we need to survive. It's better to take on a manageable debt that at least gives you some benefit than to dump your money into some landlords profit margin.
I tell my soon-to-leave-the-nest kids:
Rent is the most you will pay every month. The mortgage is the least you will pay every month.
I'm loving them being here as full grown adults and enjoy my time with them and with our particular house they are seeing that lesson play out in real time. Some big expenses and I am the DIY dude. I don't fuck with (big) electric or gas though, that shit can really backfire.
Rent vs mortgage - gotta put a caveat on that one.
Renting = landlord gets all the money but has to maintain the property.
Mortgage - bank gets all the money and you get a partial refund if you sell. You pay for the upkeep. A mortgage is not really an "investment", you usually lose money on the deal if you live there. It's cheap rent from the bank.
It basic math to see which one is better long term. Usually the mortgage wins because of of the partial return. However if you can't do the upkeep yourself, renting is often a better financial decision.
There have been times when renting was the smarter financial decision. Like the housing bubble in 2003-2007. You could rent places for 1/2 what it would cost to buy them per month.
I think people should listen to this user.
The other side of that is that my mortgage, even with rising property taxes and my house appreciating wildly in value, tracks less than renting.
If I could rent a place for the price of my mortgage with the cost rising at the level my mortgage does … I’d rent all day long
Yeah, that's the thing. The market went upside down. Maybe 1993? Before that renting made sense even from a financial perspective in many areas. But now when housing is double or treble inflation? Nope. Sink money into real property at your first opportunity.
We have fucked up the entire "developed" world so much that if you start poor you stay poor and housing is a large part of that equation.
In my lifetime interest rates on mortgages went from high teens to the 3.whatever I have.
Home values skyrocketed and now the expectation seems to be this must continue.
Honestly I’m happier to pass my house on to my kid than turn a profit on it.
Now if HE buys a house and inherits mine … I hope he turns a fat profit on it lmao
Right? My parents were ecstatic to get 11% on the home I grew up in. Now my mom's retirement condo? three dot whatever like you said.
That decision is true today, but realistically your rent will grow much faster than your mortgage (plus escrow) payment, and your mortgage payment goes away.
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
Well OK. Will not help anyone paycheck to paycheck. If the person can get out of that trap, then into the market they go
The cost of owning is significantly less than renting over the life of the unit. Repairs happen, but most of the time they aren't time critical, so you can budget out the repairs over months.
Unless the house was old when you bought it, you aren't going out of pocket on any big purchases inside the first years of ownership.
Idk where you live, but most states limit the rate at which an acessor can raise your housing price. In Texas, the cap is 10%. So your property taxes can rise, but the won't double overnight.
You can also contest the increase. Harris has been fairly receptive to a simple "my neighbor's house sold for X so my house should be worth about X, not X+20%"
The cost of owning vs renting can be very different depending on where you live and work and the amenities you want access to. Renting somewhere centrally located with good access to high quality transit and other amenities would likely be cheaper than owning. Unless we can start normalizing owning apartments again. You could own for cheaper on the outskirts of downtown, but you'll likely be sacraficing access to some amenities by doing so.
I'd need to see an example. I've never heard of a place that was cheaper to rent than own after five years. The break point on rentals tend to be short term stays, and mostly because of the cost of real estate transactions themselves.
For public housing it can be cheaper. But that's never going to be a centrally located high-rise.
Also, the 500 is just the mortgage payment. It doesn't include the insurance and property taxes and, at least in the USA, private-mortgage-insurance (pmi) if the down payment isn't at least 20%.
The monthly obligation can easily be more than that 1000. The savings is in locking the first half in at a set amount.
Covid was the wake up call I needed to realize that while I understand the nuance many others need the point made for them to understand the point of the scenario. We understand Eleanor. Some understand Callum.
I'd wager a lot more than some need a Callum to explain what they should think about anything, given the state of things.
And while we're ranting about this, can we throw PMI and whomever came up with it on the bonfire where they belong?
Your telling me that I need to pay for you to have insurance in case I default while your also charging me interest who's very purpose is to offset risk? Why am I paying to offset your risk FUCKING TWICE AND HOW IS THIS FUCKING LEGAL.
Shit infuriates me. I want all the bankers to get William Wallace on live TV, recorded and played back once a year during a mandatory viewing window so that we never, ever, forget.
Its legal because value comes from ownership, not from doing things.
And if that sounds insane; you're a fucking commie.
Is it ironic? We can't know nowadays.
The vibe I get is that they mean it as a compliment
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.
Also if you were to default they would take your house and get the insurance money
Interest is not intended to offset risk?
Interest provides a return on capital.
If you have $1 youre not using you might let someone else use it if they incentivise you by giving you an interest in their need.
If you give $1 to 100 different people you might increase the rate for some of them to offset your additional risk, but thats not the purpose of Interest.
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.
Ok, your loan has been determined to be higher risk therefore you have to pay more. Why did we need to invent a second payment called PMI instead of just charging a higher rate to higher risk borrowers? Why do interest rates need to remain "reasonable" ?
That's a good question actually.
In Australia, some 60 years ago, banks wouldn't lend over 80% of the purchase price for a property.
The federal government created a government department to provide lenders mortgage insurance. It wasn't a free government service, but a good example of the federal government stepping in to do something private enterprise wasn't able to.
Since then of course that department has been privatised, like everything else, so private institutions provide that service now.
There do remain some differences between LMI and just simply extra interest. Notably LMI is a once off payment, and it can be included in the loan.
More recently, the Australian Federal Government has rolled out a scheme to pretty much abolish LMI. They're just going to guarantee the loans for free.
This is one of the reasons my wife and I took so long to get a house. I refused to pay this absolute SCAM. So we saved up to put 20% down. What a crock.
The alternative would probably be (much) higher interest rates until you get below 80% LTV at which point you're "allowed" to refinance...but no bank will ever remind you of this in hopes you forget...or prime will skyrocket and you'll be stuck in high interest for an unknown amount of time.
I think you should put away the monkey paw before they get more inspiration.
Thanks for the hearty laugh
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
Yeah, the 3x salary requirements are insane when housing accounts for almost 50% of people's take home pay in most places.
3x rent is pre tax, 50% is after tax.
Just a small clarification.
There's a rule of thumb that your rent / mortgage payments should only be 1/3 of your pre-tax pay. In expensive cities that's sometimes impossible to manage. But $1300 out of $2000 means you're spending 2/3 of your pre-tax pay on housing. If you're taxed at only 20% that means your take-home pay is going to be $1600. After rent you'd only have $300 a month for food, utilities, clothing, transportation, etc.
If I were a landlord and someone on $2000/month wanted a $1300/month apartment, I'd be asking questions too.
They don't actually need regular payments for 10-30 years. They need you deposit that down payment cash ASAP so they can lease it to billionaires and crypto exchanges.
The deposit is to cover expenses/losses that arise out of defaults. Housing loans have been lile this forever. Not everything is a conspiracy.
the deposit is the keep young, inexperienced and glowy-eyes people from making commitments they don't have the stamina to handle.
it happens a lot that 20 year olds want to buy a house with their new partner that they think they're gonna be together with for the rest of their lives, only to have it all fall apart 5 years later. forcing to you save up a bit before actually buying the house means you go through a lot of experiences before you actually buy a house, which makes it more likely that you'll have the far-sightedness that's needed to actually buy a house. :)
That’s one thing, but there’s definitely a factor of "if there's a market downturn AND we have to foreclose, we don’t want to lose too much".
The house you're buying is the collateral for their loan. If you took out a loan for 100% of the value of the house and are immediately unable to make payments, the bank then owns the house. For them to simply break even, they'd have to sell the house for more than you paid for it to cover the various costs (lawyers, agents, etc.) If the reason you're unable to make payments is that the economy crashed and housing prices tanked as a result, the bank couldn't hope to break even on their loan.
The down payment is basically a way to ensure that in the bank's worst case scenario they still don't lose money. In theory, the bigger the down payment, the lower the risk for the bank, and the better a rate you should get on the loan. Multiple banks should all be trying to be the one to give you a mortgage, and should be trying to compete by shaving their margins as tight as possible given their risk tolerance. Of course, it doesn't always work out that way, but there's a reason for what they're doing and it's not just to screw over their customers.
They can't really ensure a positive worst case scenario. 15% is the minimum down payment where I live unless you use extra collateral, but a home could lose half its value if there's a major economic downturn.
They're just mitigating bad scenarios, not anything close to the worst case.
The worst case scenario is that the Earth is hit by a giant asteroid. At that point what does a little risk hedging in a financial transaction matter?
Not necessarily young but inexperienced yes
Idiocy.
The bank doesn't get the down payment. The person selling the house does.
You pay that person the down payment, and the bank pays them the rest.
Honestly there's loads of great reasons to hate banks but lots keep it real and avoid making up nonsense.
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.
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.
But how do they lease your deposit to billionaires and crypto exchanges?
Actually i guess the bigger issue is that we're gonna be unemployed in 15 years due to a declining demand of human labor and then who pays back what?
Today you could afford the pay-back rate, but not in the future, and the banks are well aware of that.
Right? You don't need to exist long term. Fuck off and die, meat.
Edit: by which i of course mean 'i dont need you to exist'. Which is the same thing, right?
There is no declining demand of human labour, and there is no indication that it will ever happen. The way the labour is performed is changing, just like it always does
Joke's on them, I have a 15-year mortgage on my condo. (Lower interest rate than a 30-year mortgage, USA, ymmv)
Where y'all finding houses for 500/month with a 25k downpayment?
Seems cheap af. If you only did a 25k downpayment the mortgage would certainly be more expensive than rent where I'm at.
There will be shitholes in bum fuck nowhere but in this area rent will not be 1k lol
I bought a 2 bedroom single family home in South Carolina last year for $86k with only $11k down, 7 minute drive from the city center of the capital city (Columbia). Mortgage is $480/mo. Cheap houses absolutely still exist if you're willing to live in areas where "nobody wants to live"
My house was cheap in a shit area (like knuckle draggers shouting at hotels shit) and that cost me £800 a month 20 years ago.
And that was with a massive deposit. Still, paid that shit off now.
I went from an apartment that cost ~$1250/mo. To a mortgage that costs ~$4300/mo. Just got the "privilege" of owning a home (and paying for all repairs myself).
I can only afford this because of the people I'm sharing that cost with. We're all on the deed, and we all have a stake, and claim to, the house. Four of us.
My payment didn't really change.
The only way we could get to the point of a down payment is that one of the four of us has been saving for something like this since they were in highschool. Because of their effort, we had enough for a down payment.
And I'm lucky to be in this position.
What a fucking crock of shit.
Despite all of this, I'm hoping the market takes a dive so the rest of you can do the same at a much more affordable rate. I've already spent the money and I'll be spending years paying it off. I didn't buy a house up objectively save money, I bought a house for stability. I never want to move ever again. There are good reasons for that which I won't get into. I promise that I will have ZERO issues if you all get a better deal than I did. I hope you do, and I hope the housing market, specifically the rental/flipping/"income property" markets crash, hard.
In the same way, I've paid off my school debt, I'm in favor of school debt forgiveness. I also enjoy pretty good health, I'm in favor of universal healthcare. I've never caused, not been the victim of a fire, I'm in favor of fire departments.
I could go on.
Good luck everyone.
That's commie talk son. We pull the ladder up behind us in America.
I'm glad I don't live in America then.
aren't you lucky
Damn $4300 a month. I thought my $2600 was steep.
Right before we moved my rent had gone up to $2500 so it was a push. Now when we first started living there the rent was $1400 and the landlord had even refied so his mortgage was cheaper at the end. When we were moving out and he drove up in a brand new Rivian that I’m pretty sure I basically paid for…
To be fair, it's a pretty large home. I'm living with my SO, my brother and his wife and there's a couple of offspring that needed space too. Our house has ~5 ish bedrooms. Considering the number of people who live here, it can feel small. If it was just me and my SO, this would be humungous.
But that also means that we have four fully grown adults helping with the mortgage. So my share of the mortgage is around $1100 ish, per month, and we split most of the household bills, so I usually throw in about $400 more to help with that. I personally pay about $1500/mo.
My SO does the same, and we've encouraged my brother and his wife to also do the same. If everyone pays $1500 towards the house every month, we have more than enough to cover all the bills (electric/gas/water), as well as shared things like the Internet. Also that's enough to cover the house insurance.
Yeah that actually sounds a little better than me. I’m the main bread winner and I’m responsible for almost all of it. It can be a little stressful at times
Yeah, I went from $1200 rent to a $1300 mortgage but the city added $50k more value to the assesment so between taxes and insurance it's going up to $1700/mo next year so that's fun. I don't know how many more years of that I could afford cuz $2600 just isn't doable for me :/
The first time I applied for a loan, I didn't have a credit card yet. And they were like:
Because I haven't needed credit in the past and I'm still alive, idk? Having enough liquidity to not need credit would seem to suggest I'm good with money.
Ok? How does using a credit card change that?
They are NOT looking to see if you are responsible with money. They are looking to see if they can make money off of you, so they want you to be a heavy credit user. Before I bought my house I made sure to take out two credit cards and just buy random shit on them for a few months because that boosts my credit score drastically which then made it easy to get the loan. Banks HATE people with limited debt because it means you are not a loyal customer that they could make money off of. Yes, it makes no sense but that's just how the economy works. Even if you don't have any reason to buy things on credit, you still should. Even if you are very financially responsible, you should always have "stupid debt," by that I mean debt for the sake of debt, because banks love that shit and it'll help you out if you ever actually do need a loan for something.
Because people that quickly pay off their principal and avoid accruing interest don't make the Credit Card companies as much money. They prefer people that are bad with money, sort of like how police departments don't accept applicants that do too well on the tests.
That's the impression I get too
But it's plausibly deniable enough because you can still get decent credit score if you pay off your credit before you pay interest. It's a numbers game for them, I expect, but still.
Considering how much data they can get on anyone, this process seems pointless and outdated, except to give them somewhat arbitrary power over who can get a loan.
Not that I like such private data to be available at any institutions fingertips, but so it is these days.
Going to be wild when people just give up on society and just start eating the ruling and ownership class. I tried warning these assholes if they didn’t give something. Then they would doom their existence. And now you have more people radicalizing everyday because they are being put on the streets.
good news, theyre counting rent and utilities payment as a way to build credit now! link
Well shoot. Why wasn’t this the case from the start? I’ve only ever had troubles with payments a few times in the 10 years I’ve been renting. Good thing none of that counts for anything and the clock is just now starting.
There used to be a service called Williams Paid that would act as a middle man to pay your rent, then report it on your credit.
That seems to be for the US when OP is in the UK based on the £ use
true, whoops lol. sorry
Yeah, and I think it's not about history, it's about mortgage initial payment, which is some% of target property cost.
And the idea that it's bad thing is just stupid. Anyone read about previous housing bubble remembers how people took multiple mortgages because you could let your house for more than you pay for mortgage per month, and as crisis hit, they couldn't repay. It was very much enabled by zero mortgage initial payments.
That's just for the "paid on time" section of your report. It helps a bit with your score, but it doesn't change how banks determine your debt to income ratio.
Yes, Experian (a company that has had multiple data breaches) is now allowing you to give them more of your personal data for free, and in return they will add your Netflix and Xfinity payments to your credit report.
And then the banks that consider your loan will still do the same process they did before — i.e. not consider your Netflix and Xfinity payments.
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.
Same shit happening in Scotland. Knobheads makin bids above asking price on slum complexes in the city like it's fooken millionaire row. Last landlord I had chucked a new tenant out and returned her deposit for complaining about the broken shower basin cos he cannae be arsed. Not exaggerating.
It's mad given that Scotland technically is quite pro-renter. You just can't enforce anything so landlords have learned not to give a fuck. A friend viewed a tennament they were trying to let with no kitchen (as in no cooker fridge or sink). Like something out of trainspotting.
I never thought I'd end up at a place in life where I worry about real estate valuations, but here we are. In my condo building, things are getting decrepit. I wondered why no one else seemed to care then I realized I'm in the minority of owner-residents, every one else rents out, so they don't care about how it looks. They just care about rents coming in.
Then I wondered why they don't care about losing value, then I realized, no one is losing value, some units here sell for the same price as a single-family home in the suburbs, even with the graffiti and homeless people wandering the street.
To be the devil's advocate here. Rental payments vs mortgage payments is not an accurate comparison of the true financial burdens.
With many rentals some if not all utilities are included in the price of rent, whereas homeowners must pay the full cost of utilities. There is also the additional cost of home insurance and property taxes. Most rentals have the majority of their maintaince covered whereas the homeowner is responsible for lawn cutting, gutter cleanings etc. The cost of repairs and maintaince is not negligible. While renting if the heat quits or an appliance breaks, the landlord is supposed to cover the cost but owning means you must take that full cost.
In the posted example, having double the mortage payment in rent payment is probably adequate to cover the additonal costs but the comparison of renting vs owning is not black and white. Several financial managers have even studied that depending on your needs and income, you can actually be getting ahead financially by renting if you don't actually need the full benefits of owning and are able to maintain a store of wealth through other investments. This is especially true if you are in a rent controlled unit.
It seems like you are assuming an apartment rental and not a home rental. In my experience home rentals work very differently. Utilities are not included and you do end up paying quite a bit to maintain the home.
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.
You live in Germany don't you
Or any country with responsible lending rules.
Lenders are not your friends. They'd take your organs as payment if they were allowed. The rules are there to stop them doing bad lending and then hounding you to your death.
yes, as any good for profit company should
Oof bruh, I am starting to doubt my earlier offer...
Is it a thing to find German mortgaging standards whacky?! I finally feel heard! Basically everyone here seems to pick up 35+ year mortgages with seemingly low monthly expenses, but the overall amount of interest they accumulate over that time is absolutely insane! And still, everyone says that you shouldn't pay more than 30% of your monthly income into your mortgage. It's hard to even find a bank that allows you to pay for a decent Sondertilgung each year. And don't even get me started on that whole Bausparvertrag system, because I have no idea what is going on with it or why anyone would ever do that
Fudging the numbers a bit, but let's say I'm paying $3000/mo for a mortgage. Brokers tell me I can afford $10,000/mo.
I cannot afford $10,000/mo.
Yeah that was my experience as well. Mortgage companies were happy to pre approve me up to like 75% of my monthly income. Not even close to enough to buy even cheap food.
I saved up a big (to me) chunk a few years ago, thought I was there. Expected the red carpet to roll out. Nooooope. There were people buying houses for $100k more than the asking price, sight unseen, within a week or two of the house being listed. My little $40k deposit was adorable, in comparison. I had no chance. Then Covid, life, etc...
Was it in a desirable location? Our tourist town went out of control with our of state buyers during the pandemic, but property values have adjusted back some and the market competition is gone. If you still have some of that $40k now might be a better time. My wife and I just did the federal First Time Homebuyers class and wound up getting a USDA rural development loan, they wouldn't even let us put a down payment to lower our payments.
I am a skidmark that cannot believe that I live in a house that I "own"(have a mortgage). And I am so much less pessimistic about anybody's potential to do what I did. I am happy to answer some questions. I make $22 an hour and my wife makes $17, the loan officer told me I almost make too much for the program.
Yes, at the time, I was hoping to buy in the Salt Lake Valley and it just wasn't feasible. Thank you for the tip, I will read up on the USDA loans.
The 100k+ over asking was the big deal because that never made it into the housing data properly so prices looked like they were lower than they were and we don't have accurate comparison data now
People don't want to twerk anymore!
We have back problems now, Lauren.
At this point, yeah I would twerk on OnlyFans just to get a mortgage..
Suppose I was the bank...
Guy1) Hey bank I want to sell my house for $1,000,000.00. Here is the deed, I owe $999,999.00 bank2.
Bank1) OK I'll take the house, here is $1.00 and $999,999.00 for bank2. Did you fuck up the house or burn it down to the point I can't sell it?
Guy1) yup to the ground I burnt it all.
Assessor) I'll charge Bank 1 $300 to go asses the price. Yeah currently this property can be sold for $300,546.00.
Bank 1) OK Guy1, you owe Bank2 $699,454.00 but here's your $1.00.
Guy1) your honor I need to file for chapter 11. I have no money
Guy2) Bank 1, I would like to buy this property.
Bank1) Sure that'll be $1,000,000.00.
Yeeeeah, I was too adult in 2008 to go "you know the real problem? We check too hard for solvency when giving out mortgages".
Not that I have a silver bullet for solving a housing crisis. There probably isn't one. You need a lot more public housing as a percentage of the total pool, that much I can tell. How you fix a job market where nobody holds the same position for more than a handful of years is beyond me. You probably need to make it much more expensive to own a house without living in it or renting it out. You definitely want to make it much more expensive for corporations to own housing.
Guessing that's harder to fit in a pithy, viral tweet, though.
The biggest thing we can do for the housing crisis is making density legal again and allocating more space in cities to housing instead of parking cars.
Yeah, that'd work a lot better for me if I was American and not painfully aware of similar issues happening in cities where cars fold like umbrellas and are almost entirely parked underground.
I mean, don't get me wrong, you guys have a whole continent you can use for this, so maybe you can brute force it. Definitely not "the biggest thing" where I'm from, though.
I'm glad someone mentioned the 2008 financial crisis. Banks need to be fairly confident the person they are giving the mortgage to can afford the payment now and for the next thirty years. There are plenty of unfair reasons why someone may not be able to buy a home today, but not being able to afford a down payment is not one of them.
I hate to break it to you, but mortgage payments are not cheaper then rent anymore. Obviously depends on your mortgage and money down and all that, but if you expect to pay half as much for mortgage payments as you did for rent, you're going to have a very bad time.
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.
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
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.
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.
You can't even get an apartment here without making a ton of money. Cheapest studio apartment here is $1,500 a month. I have to prove i make $4,500 a month just to barely qualify, which i don't. Then they charge you so much for application fees, and then utilities they overcharge for, it's all a scam.
Come back with some inheritance and then we will talk.
Yeah saving the money to buy a house is terrible.
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
How fucking old is this? Unless it's a real shithole, mortgages have not been this cheap since Truss fucked up the economy
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.
And if it gets so bad that the bank starts losing money... no worries, the government will simply bail them out like usual!
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.
And do what? Live under a bridge? You would still have to buy a new house. Are you going to find similar house at $600k easily? Are interest rates still low despite market collapse? Will banks lend you money if just foreclosed?
Don't be daft.
I'm not providing advice regarding what someone ought to do when they find themselves in negative equity.
I'm explaining the requirement for buyers to start with a reasonable amount of equity.
Once an owner falls into negative equity, they have an incentive to default on the loan. Yes there will be consequences, but the fact remains they will he weighing those consequences against the financial incentive to default.
The "better off" in my comment is an impartial objective calculation.
But what you're saying is simply not true. Where I live you have to provide 20% of equity to get a mortgage but you can't default when the prices go down. No bank offers mortgage covered in 100% by the house. If you owe the bank $600k you owe then $600k, that's it. If you default and you're house now only costs $500k you still owe them $100k.
So the 20% requirement has nothing to do with negative equity protections. It's to limit the banks exposure in case you're unable to pay.
Sorry chief, you're just not picking up what I'm laying down.
Of course you still owe the money, you're just much less likely to pay.
I don't know how this works in US but where I live when you owe bank money they will simply garnish your wages and benefits. No one is defaulting on their mortgage to save money. That's just not a thing. I personally know people who were paying their mortgages for many many years even though their house was worth way less then the mortgage. You just suck it up and hope the price will eventually go up. If it doesn't it's still better then living on the street.
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.
Declaring bankruptcy would only be beneficial if the housing market fully crashed and it went down in price significantly and you don't think it'll be going back up within the next few years.
Not to mention it'll be a lot harder to get a house in the future if you did that, and you'd get all the other downsides of bankruptcy as well.
Not to mention, this is all under a stay that assumes you'd actually be able to buy a house without a significant deposit.
Under the current system, it'd be an even bigger setback because if the house did lose a lot of value, now you're also out a huge amount of money, still have to pay the full loan anyway, and it might take years to save up enough again to get a future house.
Basically, the banks are operating more as insurance gamblers now than they are lenders, because no matter what they win big. Even though banks should primarily work as centralized financial institutions rather than businesses, because otherwise they cause huge ramifications for the economy.
It's a little nefarious
nefari-ish, if you will.
Correct.
Less down payment means more risk and therefore more interest.
Its pretty simple really.
But if you don't pay, they get the house. There is no risk of loss, only risk of not maximizing profit.
Foreclosing is a very expensive process.
If you borrow 100% of the purchase price and the bank has to foreclose they would incur a loss.
Oh no, their own process that they made for being given a house is so expensive, I feel so bad for them!
Why are you defending them so hard? You just have to look at their quarterly financials. They're making out like gangbusters.
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.
The problem here is inability to read between the lines. The [bank?]'s message is pretty clear: "Stop polluting my sight, you filthy poor."
I know a lot of you are urbanites, but for anyone who isn't, check out the USDA 502 direct loan program
My house was literally like 100 yards from being eligible for one.
Front or back yards?
First one, then the other.
That'll take forever but I'm prepared to play the lawn game.
my municipality fought the USDA redistricting in the 1980s and kept the hamlet where my house is in the program.
I've never paid a mortgage, but £500 seems pretty low. Do mortgage payments tend to be that much cheaper than rent prices?
Anecdotally I pay over 200% the cost of my father's mortgage to rent a home in a lower cost of living area.
I think most of the people disagreeing with the post are from the USA, which has completely different costs/taxes/prices etc.
In the UK (as the original post is), it depends where you live - our mortgage is about £350 per month (5 bed terrace), but if would have been almost £500 a month without the deposit. Rent in the area is about £600 - £1500 per month, for similar or smaller properties.
Note that this is in Northern UK, in the sort of town sometimes described as "a bit of a shithole". I could get a train to a town an hour away and the prices would literally double - but the ratio between mortgage and rent would be pretty much the same.
Even with the cost of repairs, and a tiny bit on insurance etc, it's a significant saving. Also, the repairs actually get done, which was not the experience I had in rented accommodation.
Definitely not as low as £500… but mortgages are generally cheaper, sometimes much cheaper than rent. Example: we own a 5-bedroom house with a mortgage of $1,900, my step-son just moved into a 2-bedroom apartment for $2,200 rent.
I was paying $3,300/mo rent back in 2020. Got a mortgage at the low rates of 2021 and got a $2,800 monthly rate. So it seems like it's cheaper. But once I add the property tax (
$1,000/mo), HOA ($500), home insurance ($300), it's not at all cheaper to own than to rent. Plus paying for maintenance on our own (had to replace both the fridge and the washing machine in the time since we moved) adds up too. Not saying it was better to rent, but it was definitely cheaper.Our home insurance and property tax are escrowed and included in the $1,900. And no HOA. But the maintenance is real, something is always breaking. Had to buy washer and dryer, replace the stove and the dishwasher. I would still much rather own than rent though.
£100,000 over 30 years at 4.5% would be £506 a month. That plus the stipulated £25,000 deposit will get you a bungalow or terraced house near me as of about 18 months ago. Rent in my area starts at around £700 for a house outside of town or a single room in town.
So yes, £500 mortgage is possible. Rent being twice the cost of a mortgage for a similar property is fairly common. Banks and landlords being shitheads is guaranteed.
An ancient conundrum; you think anyone’s mortgage payment is £500, in any country? Ha!
My actual mortgage payment is probably just under $500. Taxes and insurance just put it at about $1000. I bought a nearly crack den quality fixer upper about 6 years ago in a moderately low COL area. In the truely low COL areas I imagine you might still be able to manage the same pricing today. It's probably doable, just not anywhere most people want to live or with a house that doesn't have a bunch of issues.
"in any country" took it too far, since there's places where you can basically buy a house outright for that amount. "Western/first world" wouldn't even cover it I don't think, with Italy and eastern Europe being a thing. Even in my very expensive western European country our mortgage isn't that much higher than that (we kinda lucked out), but of course once you account for all real expenses it is.
They did this before it worked out really well around 2008
Lemmy: blames capitalism for making loans too hard to get.
Also Lemmy: blames capitalism for making loans too easy to get.
More like blaming capitalism for the fact that it's necessary to get a loan just to afford something as basic as shelter
I mean, imo people should be allowed to buy a piece of land and then live in a tent there as long as they arent dumping raw sewage on the ground in a metro area. But you can't do this almost anywhere due to a number of factors which aren't capitalist, so much as they are just bad ideas. Eg, minimum lot sizes, which mandate you must buy a lot of land, rather than only the amount you need. Or setback requirements, which mandate that you waste a substantial portion of that land, increasing the incentive to buy more land so a larger percentage is useable. Or absurdly low maximum occupancy limits (eg, in my city it is illegal for more than 2 unrelated people to live in the same home). Or sfh zoning, which restricts dense housing development to an absurdly small portion of land. Or using property taxes rather than georgist land value taxes, which allow speculators to sit on land indefinitely, waiting for the value to go up, rather than selling it to someone who would put it to good use. Or auto oriented infrastructure, which ensures that you will have to own a car to get from one part of town to another.
Remove these barriers, and basically everyone would be able find an apartment to live in, or can buy a small patch of land. On these small patches of land, individuals could start living rent free with just a walmart tent, a jug of water, and a 5 gallon bucket to poop in. Homelessness would be solved almost overnight, and it would cost basically nothing. From there, individuals unburdened of the need to pay rent or mortgages, could save money to put towards paying the city to install water, sewer, and electric infrastructure; pour home foundations; build framing, roof, and siding; etc. And once a minimal home was built, they could build additions over time, also without taking out loans.
This process would replicate the way cities were traditionally built for the last 5000 or so years, and after about 30 years or so, we would start to see these areas become some of the most attractive and desireable parts of our cities.
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.
Hwy. How dare you blame systems. Only proximal causes can be addressed!
It's almost like capitalism is bullshit
What we have isn't capitalism those banks should have gone under
I would agree. Or really, those banks shouldn't have existed in the first place in that form - a "too big to fail" institution should be broken up before they can fail with a prudent economic policy.
But to lemmings, it's still capitalism.
Whatever system America is, is capitalism.
"Landlords" are probably one of the oldest grifts in the book.
Mao did nothing wrong.
except for causing that famine.
Eh, what's a little famine among friends.
if you can't afford to own a home would you rather have no options to use one temporarily while you get back on your feet?
That's not the point, and I can't tell if you're being genuine or arguing in bad faith. Do you want me to take the time and effort to explain why what you said is capitalist BS? I'm happy to if you're genuinely interested in learning.
I'm aware it's capitalist, however the alternatives tend to restrict what individuals can own significantly more than what I find acceptable
Should corporations be allowed to own private housing?
if residential properties are cheaper per square foot than storage units, then absolutely
Yep, that was a litmus test to determine if you're worth my effort. You failed.
Not buy a house, inherit a house from our boomer parents.
They'll sell it to pay for the elderly homes.
You'll only inherit the clay ashtray that you made for them in 3rd grade.
Who didnt reverse mortgage it to pay for extravagant vacations. Taking the last spots to see shit like the coral reefs they murdered.
Boomer parents: emotionally abuses you for your entire childhood/teenhood
Me: Has severe depression
Boomer parents: "WHY ARE YOU SO LAZY AND UNGRATEFUL, USELESS EATER, BURDEN ON SOCIETY" then proceeds to threaten to leave me out of the will.
Funny thing is, she also threatens to leave my older brother out of the will. Basically she tries to make us hate each other, and we do hate each other. My entire family is dysfunctional. They are all conservatives, racists, LGBT+ phobic, has the toxic masculinity mentality, ableist af. They think anyone with a slight disability deserves to get executed because its "a waste of resources". This is why I dislike my ancestral homeland, it reminds me of hatred and intolerance.
Edit: Technically they aren't boomers, but I'll still call them boomers because they share that same boomer mindset.
Three kids, one house, we hunger gaming this shit?
'Cos two of us are married, there's kids and that house only has three bedrooms and no land for extensions
(I kid of course, my sister is inheriting my house when I inevitably explode)
I am coming to realize that my rural perspective is pretty different, and that lots of people live in way higher cost of living areas than I do. My biggest suggestion is if you don't like expensive housing, get out of the city.
This really isn't as easy as it sounds. Moving means you lose your support system of friends and family etc. Some people have children and need the grandparents to help watch them during the day as just one example. Job opportunities are likely not the same. While their current city job may not pay a lot the opportunities from that job could lead a lot higher but of course life choices can be a gamble. On top of all of that, moving long distance is difficult and expensive.
I have a highly intelligent friend from a small southern town and he moved out of there because he recognized there weren't any opportunities for someone with talent but no capital. Sure he could have stayed and bought a cheaper house but he'd still struggle to make the payment on his small salary.
You realize the headquarters of Walmart are in Arkansas? There are plenty of very high paying jobs in significantly more affordable places. Also if you pay 1/4 less for a house, and add daily childcare it's still gonna be cheaper. People literally do it all the time, the whole concept of the suburbs was created so that people could afford houses.
I moved to the small town. I'm a college drop out, there's always labor in the country, and I guess I just don't want as much from life as other people. I'll be happy working maintenance the rest of my life of it keeps providing.
This is an unpopular take, but that is reality. It really is affordable out here! If you want more income, learn to repair reliable japanese beaters and commute a little. It's less busy than the city, and it may bore some, but it keeps the bills paid, the kids fed, and the 401k growing.
The problem is some jobs are only inside the city
Very dependent on the field. A lot of jobs are concentrated in a handful of major cities, mostly very HCOL but with high salary. That's why remote work becoming bigger partially caused the housing surge nationwide.
We know.
There are a number of people that have a home in the country with their family, and they travel to the city to work. Sometimes they are homeless during the work, or rent a small room.
No, it is not the ideal solution, but it is a solution. Fixing the housing situation is beyond most people's power, and it will take a long time for those trying to fix it to actually fix it.
If city folk starts coming to rural area, they will start complaining that city people are jacking up property prices.
I tried and here are some places I have looked where the average home is $810,000 come to find out.
Pinedale, Wyoming, USA Ennis, Montana, USA
These are in the mountains about 1 hour from the nearest big city of Jackson, Wyoming and Bozeman, Montana. I guess I need to look in the deep sticks.
Are you really confused why those properties are expensive? Those are both desirable locations in regions with quickly growing populations. How about Livingston, or Butte?
I am as there isn’t anything here. Cows and mountains. I am staying here passing three and it’s just nothing. Normally you would get water front and community features to set the price but none of that is here. I guess the confusing part is what is attracting people here. It can’t just be the mountains.
Hmm. What if we abolish private property?
And on top of that, they made any alternative illegal! You want to live in your van? Illegal, you want to build a tiny house? Illegal. It's insane
500 Vs 1000? What year is it?
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
I know that it is why why would you be entitled to own a home just because you can make rent payments? Do you think the bank should give you a mortgage with $0 down? There are enough people buying who can save a down payment just fine
Mortgage payments are almost never lower than rent unless you are seriously downgrading
Given the figures are in pound sterling, quite often in the UK the mortgage payments are signficiantly lower than renting, 100% makes sense when in the context of the British housing market.
I bought my first apartment because it was like €500 per month cheaper than renting a similar place. ¯\_(ツ)_/¯
Here in the UK rent is always much higher than mortgage payments. Where do you live?
Mortgage payments are almost universally lower than rent payments. With rent, you're paying for upkeep, maintenance, administration, a profit margin and the landlord's mortgage.
Mortgage is lower than rent in BC but of course it is, you need like minimum $100k down payment to own
More like a braindead comment
Bad take. In my situation it went from us paying $1900 in rent to paying $4500 in mortgage.
How??!
While renting in some markets can be cheaper than typical mortgage for comparable homes, the amount indicated seems a bit insane.
So either he is in a crazy real estate market, or there's some additional context that makes it a poor comparison (going from renting in Virgina to Mortgage in San Francisco, going from a 1500 qt ft townhouse to a 3000 sq ft detached house with a quarter acre of land, or going for a 10-year mortgage). Or he's just making it up or exaggerating because it's the internet.
Interestingly enough that $4500 is pretty much exactly what it would be with 20% down on a $500,000 house for a 10-year mortgage. Of course, I'd expect such a house to rent for about $2700 rather than $1900. I could easily imagine he was renting a 2000 square foot 3 bedroom for $1900 and moving to what seems 'slightly better' 3000 square foot 3 bedroom with an extra special room or something, seeing that the 10-year mortgage is much cheaper in the long haul and going for it despite the huge monthly payment in the short term.
It depends on the market. Around here is similar, the market rental rate for a house is lower than what even the most lowest realistic monthly mortgage payment would be, but only by about 10% or so. I don't know if you also dramatically upgraded your home quality.
Not too long ago around here it was the same as the post, renting higher than mortgage.
Even then over long term, the mortgage would make sense, since you can sell and get back some of the money and your principal and interest won't magically get bigger because of market conditions.
In a sane world renting should be a touch cheaper than mortgage over the first few years, with tenants that only plan to be there 2 or three years. The owner gets a little income while taxes and insurance get paid and their asset maintained, and the tenant gets an easier and cheaper house to move in and out of for a short term living arrangement. Problem being when the market is upside down and when tenants are stuck never being able to build equity.
Well you made a choice. Either you knew you could make the payments for the price range you bought into, or you didn't read the repayments figures on any of the documents the bank sent you and made a massive decision uninformed.
I pay 20% more for my mortgage than I did on my rent, but the house is also better, I can easily afford it, and I made that choice willingly and I'm happy with that arrangement.
The bad take I was referring to was OP claiming the mortgage payment would be lower than the rent payment. In the US this is almost never the case. Edit: we have fixed rate mortgages in the US. My payment will only go up because of taxes or insurance.
Most countries have fixed-rate mortgages. Most rental properties are also mortgaged. So a renter is paying for maintenance/insurance/tax costs, the landlord's profits margin and the landlord's mortgage.
If the landlord has a 10-year mortgage they just took out, the rental market wouldn't cover that, because that landlord is competing with comparable properties that didn't choose that amount. They are also competing with people that bought the property a decade ago and don't have the same mortgage burden. They are also competing with some that even considers their accumulation of equity a component of their wealth and wouldn't mind being mildly underwater early in their loan for the long term advantage.
At least in my area, the way the real estate market has worked out is that renting is about 10-15% lower than monthly expense for a 30-year purchase after 20% downpayment. If the real estate bubble pops, that will probably flip back around, but for now, the renters are getting a discount for short term, which in my opinion is the way it should be, renters getting a bit of a break for their equity disadvantage. In a sane market, the renter gets a cheaper payment that makes financial sense for 2-3 years in a property rather than being forced to rent by an owner class making new ownership impossible.
This isn't usually the case in the UK. Rent is generally much, much higher than mortgage payments.
All rents cover mortgage, taxes, insurance, upkeep, and usually a percentage profit on top of it all. Unless your lord is renting to you at cost or below (in which case they're losing money (not counting equity)), then there is no way the cost to rent would be higher on an equivalent property.
Like just imagine if you wanted to rent out your property for $1900/mo - you couldn't do it.
Actually, not necessarily.
In my local market, a house that would be about $2700/month in mortgage/insurance/taxes on a 30 year term after a huge downpayment would rent for about $2400/month right now.
There are some owners that in fact do count the equity, so they are willing to buy higher and be upside down compared to what a mortgage could be. The recognize the rent is only part of the income, that the property value going up is a potential gain to cash in that's worth a few hundred a month to 'deposit'.
Especially if the owners can pay cash and not incur the interest associated with a mortgage. It's a bit of an odd choice right now as just letting the cash sit in a savings account offers competitive ROI with the current interest rates, but you've got a lot of property bought under previous conditions.
This only holds for relatively short term though, you'd expect rent hikes to go to $3000/month within a time period where that ownership monthly payment might only go up to $2800/month due to taxes and insurance rates. So 10 years into living somewhere you are now paying more to rent it than you would be if you had purchased comparable, even ignoring the equity part of the equation. If you include equity, then you better be planning to get out in 2 or 3 years at the most if you are embarking on renting, otherwise it's much much better to buy even with higher mortgage payment, since you can cash in on the equity if you need to, eventually.
I'd say this is a relatively sane fiscal model of renting, that you need to give the renters a discount reflecting their lack of equity. I'm kind of glad to see rental rates being below mortgage rates in my area right now. That said, it wasn't too long ago that rental rates in my area were higher than what mortgage could be, but large companies bought up housing stock and made it supremely difficult to actually buy as a private party. With the interest rates jacked up, those companies are cooling it a bit since they don't have access to 'free money' anymore.
My old house went up over 400k between 2019-2025. So, if I'd sold it in 2019, they could absolutely afford to rent to me at a lower price than if I tried buying it again.
Yeah that's the vagaries of the housing market and valuation, which is why I said equivalent property.
There's also no reason you couldn't sell that house for 400k less. The value is just the value. It's going to be the same whether you're renting or paying the bank for the same property.
I also won big by buying prepan, but who's up or down in the Canadian housing lotto doesn't change the physics of paying a lord's mortgage costing more than if you were paying the bank's mortgage directly.
Nevermind that whoever gets to be lord keeps the equity.
I think the point is that properties on market are, as a rule, not very recently purchased with a 30-year mortgage. So the monthly cost now required to cover the owners costs may be based on financial conditions from 6 years ago. If the rental market has a lot of properties that have been held a while but house values have rocketed, then you have a critical mass of owners willing and ready to out-compete brand new mortgage rates even if they ignore their equity advantage.
In my area, that's what we see, real estate prices are dramatically up as are interest rates, so mortgage cost to acquire is a fair amount above the going rate to rent comparable properties. Someone getting a 30 year mortgage to rent out a property would be underwater for very many years in the current market conditions around my area, as they have to compete with more aggressive owners that have had their properties for many years.
Ah yes, I could see that situation arising, although frankly I'm as surprised to hear of landlords competing for tenants as I would be to hear of them selling their properties for under market value. Not that I'm doubting your honesty--it's just not been my personal experience.
I've heard too many personal anecdotes of landlords trying to hike up rates by seeking spurious evictions, or refusing to install climate control, for tenants who are getting a "good deal" at lower rates. Maybe there are rational markets out there, but I don't personally hold out much hope for landlords to be reasonable in the face of the dual pressures of fear and greed.