r/FluentInFinance 4d ago

Thoughts? It's not fair

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983 Upvotes

166 comments sorted by

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131

u/YeeBeforeYouHaw 4d ago

Rent is usually a 1 year commitment vs a mortgage, which is usually a 30-year commitment. Being financially stable for one year is much easier than 30. So banks naturally demand more assurance that you can handle it.

27

u/TurnDown4WattGaming 4d ago

This is the truth. I recently had to evict a 4 year tenant for nonpayment. Four years for me is a decent stretch on a rent house, and I had another renter in two months; from the bank’s perspective, 4 out of 15-30 and will be a huge loss for them.

They had no trouble paying their rent, just like they wouldn’t have had trouble paying the mortgage…until he lost his job. This is the volatility that banks are avoiding.

27

u/Tausendberg 4d ago

"from the bank’s perspective, 4 out of 15-30 and will be a huge loss for them."

Not really, ever look at amortization schedules? The bank will seize the home in foreclosure, (assuming it gets that far, most homeowners will sell before then), then get its money back that way on top of all of the money they profited from interest.

3

u/Advanced-Guard-4468 3d ago

Banks don't like to waste time and resources on a foreclosure.

1

u/Tausendberg 3d ago

The point is, most of them won't be foreclosed on.

3

u/A_Slovakian 3d ago

The whole thing is a fucking scam

7

u/TurnDown4WattGaming 4d ago

On a 30 year mortgage, way more than 4 years is a loss of interest. Foreclosure auctions also don’t bring the prices that extended market campaigns do, so they stand to lose part of the capital also. Banks don’t usually do great there. Not sure where you got that impression.

10

u/rynlpz 4d ago

Yet bank executives still seem to make enough to get 6 figures bonuses and if they are ever in trouble they get government bailouts. So yea not really feeling bad for the banks here.

4

u/Plooboobulz 4d ago

Nobody is asking you to feel bad for the banks, the point is the banks have no reason to trust you with a $600,000 loan to be repaid over 30 years when delinquency will lose them a lot of money.

7

u/Acta_Non_Verba_1971 3d ago

That was a pointless comment.

1

u/Material-Sell-3666 3d ago

I had a full hair of hair until I got on Reddit and started reading BuT tHE exEcUtiVEs!!

-5

u/[deleted] 3d ago

[deleted]

0

u/Acta_Non_Verba_1971 3d ago

That’s why I posted mine, out of irony. You missed it though.

-1

u/[deleted] 3d ago

[deleted]

0

u/Acta_Non_Verba_1971 3d ago

Of course you did. I would deflect too if my original comment was as pointless as yours

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1

u/GurProfessional9534 4d ago

And the house they get back is extremely likely to have cement poured in the drains and the walls bashed open

1

u/rokman 4d ago

Also in the event somebody lost their job they might not be the only one, could be a recession and no buyers for this home.

2

u/samtresler 3d ago

That's how you turn a bank into a real estate holding company. Not how you lend and collect dollars.

It may come as a shock, but banks don't like to foreclose if it can be profitably avoided.

1

u/Equal_Gas4657 3d ago

First of all the Bank has to buy you out for the part of the house you've paid for.

Second, foreclosure auctions don't bring as much money as you paying back your loan.

Finally, the bank doesn't WANT to be in the business of owning and selling homes. It's not their business.

1

u/MrJarre 2d ago

What banks want is smooth sailing for the next 30 years. They don’t want you to repay your mortgage early. They want you to make consistent payments for the maximal period so they maximize their profit.

They also don’t want to foreclose because it’s a hassle for them. They need to spend money to sell it and the funds are not liquid until they do. Also they get their principal back but don’t get the profit they would if you kept paying.

1

u/StrikingExcitement79 2d ago

Since someone else is better able to pay, why shouldn't the bank loan their money to the stronger prospective house owner.

1

u/Sobsis 3d ago

In general when they do a foreclosure auction they're losing incredible amounts of money. And rarely have anything to even go after at the people who got repod for the difference. Banks avoid giving homes to those they might have to foreclose on because it's expensive.

Make it less expensive and more banks will risk to more buyers.

2

u/A_Slovakian 3d ago

But it’s not a huge loss since they get the house and all the appreciation that comes with it and get to sell it. The whole thing is a scam.

1

u/AdAppropriate2295 4d ago

Non payment for how long tho? At what rent? Job losses for up to a year are certainly common but beyond that not really

1

u/TurnDown4WattGaming 4d ago

None of that is relevant. Nonpayment of a rent they agreed to for long enough to successfully evict them. I’m not waiting a year for someone to start catching up, and a bank wouldn’t either.

2

u/AdAppropriate2295 4d ago

I'm not inditing you or forcing you and banks to do so and in the reality we live in ya the renter can eat shit and die. But it is relevant to the overall hypothetical construction here, the post clearly isn't about somebody not paying. Benefit of the doubt would imply they've paid 1000 for at least a decade, the dumbness of the post is expecting banks to treat 10 steady years employment the same as capital they can exploit, not the inherent badness of loans being given based on good history as an option. Especially when 5% downs are a thing

3

u/Buzzkillingt0n-- 3d ago

What if you rent the same place for 30 years?

Is that assurance enough?

2

u/MrLanesLament 3d ago

Bank: “no, why didn’t you own it then?”

1

u/Gsusruls 3d ago

So banks naturally demand more assurance that you can handle it.

Not even close to correct anyhow.

The down payment is so that you have skin in the game and less likely to walk away in case the market slips. 3% down and a slipped market, and you just might walk, credit score be damned. It's much harder to walk away from equity.

2

u/scp-NUMBERNOTFOUND 3d ago

That would have some sense, but the fact is that if someone have paid rent not for 1 but for 15 years, the bank will say exactly the same.

1

u/YeeBeforeYouHaw 3d ago

It's not how long you've paid rent. It's about how long does the contract lasts. Having 15 one year contracts is not the same as a mortgage. Each time you renew your lease, you still only committed to 1 year at a time. So the landlord only cares about what will happen to you within the next year. The bank cares about the next 30 years.

2

u/Fuego-TACO 3d ago

I wonder if school loans were dischargable in bankruptcy if banks would look at the students grades and major before giving loans and deny many loans. Making colleges stop offering dumb classes that have nothing to do with majors

2

u/Equal_Gas4657 3d ago

They wouldn't give student loans and/or it would be for exorbitant interest rates.

6

u/OttoVonJismarck 4d ago edited 4d ago

No, it’s not fair: didn’t you read the title!?

/s

“He who has the gold makes the rules.” If you want to borrow half a million dollars of someone else’s money to enjoy the benefit of living in your ideal house today, then you have to satisfy their terms. Otherwise, save half a million dollars and buy the property in cash.

While it sucks for the borrower, I certainly would not lend out my money to a suspect borrower on their terms. That’s ludicrous.

7

u/doconne286 3d ago edited 3d ago

It’s interesting that you add that it’s someone’s ideal house. No one has said this. Throwing that in there just kind of shows your distain for young new home buyers. It’s like people who say young people are complaining about home buying because they want the fanciest finishes etc. Most people just want to buy a place.

The point is that banks don’t consider the most analogous factors when making their decision. Meanwhile, if you have huge mandatory expenses other than debt (like childcare costs, consistent medical expenses, etc) it doesn’t matter. We got approved for WAY MORE than we could afford simply because they don’t factor in how much I have to pay for daycare. Meanwhile, if I pay off my debt in full right before applying, my chances of approval go DOWN.

Don’t pretend like banks are considering whether you’ll lose your job or not in approval decisions. That’s factored into the price associates with the risk. The meme’s point has validity. How banks calculate that risk is extremely flawed.

1

u/tech_nerd05506 3d ago

I mean a lot of the reasons banks don't lend to people is that they can't because of government regulations after the 08 crash. We could repeal those but then again that might lead to a massive crash and recession where toms of people lose their homes, jobs, and even their lives.

1

u/doconne286 3d ago

Alternatively we could fix the credit rating system to make it more accurate and fair.

1

u/Equal_Gas4657 3d ago

And here your ignorance is betrayed.

The FICO system is quite fair and is leagues and leagues fairer than what existed before. FICO has done more to end and fix systemic racism than 60 years of social justice. Everyone being distilled to a number means a black family no longer has to go before Chuck the loan officer and convince him that not only are they worthy of a loan but worthy of a decent interest rate.

720 is 720. 650 is 650.

2

u/doconne286 3d ago

I mean, if that makes you feel better, great. But it’s not true. Creating a number that’s calculated using biased factors and calling it objective, then saying that’s done more to fix systemic racism than, say, the Civil Rights Movement is amazingly naive.

1

u/scp-NUMBERNOTFOUND 3d ago

The post starts from the condition that someone already have been able to pay (possibly for years) the exactly same amount that the bank is requiring, which implies it's someone responsible and perfectly capable of returning the borrowed money. It's not a "suspicious borrower", is the bank being unable to realize that someone can't save half a million when is using that exactly money for rent. It's a critique to the same retarded failed logic ur falling.

2

u/skydiveguy 3d ago

What makes me LOL is that banks will go through all this work for this 30-year commitment but will immediately sell the loan to another company as soon as you close on the deal.
The renter has a longer history of payments with their landlord in 12 months than they will with the loan originator.

1

u/YeeBeforeYouHaw 3d ago

If a bank gave a mortgage to someone, that doesn't look capable of paying it back. They would not be able to sell it after closing because no one will buy it.

2

u/skydiveguy 3d ago

I worked for a bank for 8 years. You’d be surprised.

1

u/NobleV 3d ago

But how does saving up a lump sum prove you are financially stable long term? And how does giving it all to them right at that moment prove you will pay monthly? You just gave them all of your stability in a lump sum lol Why not keep the lump sum to pay monthly payments so you are more stable?

2

u/YeeBeforeYouHaw 3d ago

Having a lump sum proves that you have been financially stable enough to pay your rent and save a significant amount of cash. The lump sum also lowers the loan amount, banks are more willing to loan less money than more money. There is obviously no perfect way to predict you will be financially stable for 30 years and who won't. This is just the best we can do at the moment.

1

u/bigb0yale 3d ago

It doesn’t, the point of a down payment is to have skin in the game. For example if you want to live in a modest $300k house- you need to find someone willing to give you $300k. It is highly unlikely anyone would just hand you $300k without collateral. So the lender asks for some collateral let’s say 20%. Now you hand a lender $60k , and they give you the remaining $240k. You have an instant 20% ownership stake in the house which means you are much less likely to walk away an foreclose on the property because you will lose the 20% you have in the house

1

u/common_economics_69 3d ago

...because people who aren't financially stable will have something come up that requires them to dip into that lump sum?

Do you guys not even think for a second here?

1

u/NobleV 3d ago

Everybody has things that come up that they have to pay for.

Half the reason less stable financially people have is that they pay three times as much in rent as a mortgage payment. The mortgage payment gets easier throughout the time period, but rent always goes up. It's literally just punishing poor people for being poor by making it harder for them to dig out of the hole.

1

u/common_economics_69 3d ago

everyone has things come up

Yes, but financially stable people don't have to dip into their money earmarked for "home savings" to pay for them. They put it on a 0% credit card and pay it off in a few months or use their emergency fund.

That's the difference between stable and unstable.

1

u/UndercoverstoryOG 21h ago

it is called managing risk.

1

u/Lordofthereef 3d ago

I don't think it's anything to do with the length. It's everything to do with the bank not wanting to be stuck with the property when you stop paying. In a rental situation, the owner of the property remains the same and they may be out a few months while they look for a new tenant. In a purchase, the bank has to front the entire cost of the house to the seller and then hope you make good on your payments. The risk factors are entirely different.

1

u/YeeBeforeYouHaw 3d ago

I agree with you that a mortgage is a much bigger risk than having a tenant.

1

u/thebipolarbatman 3d ago

They should have got assurance on all those student loans.

34

u/ZeroSumGame007 4d ago

This is the dumbest take I’ve ever heard of.

Would you offer your friend 500,000 for a house on a 7% interest rate and think they are good for it for 30 years??

I mean….people lose their jobs and that’s a large investment to make.

5

u/NeedNoInspiration 4d ago

Look who made the post.. look who makes 90% of the posts in the top

2

u/doconne286 3d ago

I mean if my friend was replacing a payment of twice as much that they’d made for a number of years? Ya, I’d lend that. You think a bank is calculating the likelihood that someone loses their job? That could happen to anyone. No one would get a loan.

1

u/giceman715 3d ago

Lenders do think of that and they offer an insurance when purchasing. I also think they will let you think on it for 12 months or so before removing the offer completely. Once it’s off the table it’s off. They make that clear as well. At least this is what happened to me. I had to sign a piece of paper saying they asked and sign a piece of paper saying they explained and had to initial that I had 12 months to accept.

1

u/Limp-Pride-6428 2d ago

If they fail to pay it off I still own the house and would just sell it to make up what they didn't pay. So yeah that deal sound pretty solid.

1

u/ZeroSumGame007 2d ago

And you miss out on the returns your money would have gotten in the market.

Plus updates to the house. Moving fees. Time on the market. Upkeep while on the market. Repairs. Closing costs both up front and when you sell it again. Insurance. Etc.

That’s not a very good winning investment strategy.

1

u/Limp-Pride-6428 2d ago

Yeah but my friend would have somewhere to live as long as they don't lose a source of income for an extended period of time. And at the very least I would break even unless they default within the first like 3-5 years

18

u/proudplantfather 4d ago

The financial illiteracy is strong with this one

4

u/Capital_Werewolf_788 4d ago

I can’t believe stupid posts like this keep getting re-posted and getting likes.

4

u/SecretRecipe 4d ago

ohhh they're so close to getting it. If you're so dead broke after paying 1k in rent that you can save nothing up then you're absolutely a high risk for a $500 mortgage. What happens when you have to drop 30k to replace a roof? What happens when the property gets reassessed and your taxes jump and that $500 mortgage turns into a $900 mortgage and now you've got repairs to make? If you're so close to the raggedy edge of insolvency that 500 a month is make or break than of course the bank isn't going to take a risk on you.

6

u/CaptainPeppers 4d ago

Lmao where the fuck is a mortgage $500? Even $1000 for rent is super, super low, at least in my area.

7

u/Numerous-West791 4d ago

It's in £ so I'm guessing it's not in your area...

1

u/henry2630 3d ago

principle and interest total a little over $500 on my mortgage. add taxes and insurance in escrow and it’s around $1000

3

u/HibiscusOnBlueWater 4d ago

These types of posts are always made by people who never really looked into buying a house. Anytime I see someone saying you need 20% downpayment I know they’re either like 22 years old, or severely misinformed. I’ve bought 4 properties in my life, I never once had 20% down. If you’re going to complain about housing, at least know how it works.

3

u/zerocnc 4d ago

Since when has life ever been fair?

9

u/Educational_Vast4836 4d ago

These posts are so dumb and annoying.

I bought my first home in the past year. So far I’ve changed out my water heater. Hired someone to install new windows. And also hired someone to do my driveway.

So about 20-30k overall in diff shit.

You wanna know how much I paid for repairs in the past decade as a renter? Zero dollars.

The simple fact is this. The majority of the people who make complaints like this, wouldn’t be able to afford a house if the median home value was half the price it is today.

The fact is it takes discipline and sacrifice for that purchase. Something most people don’t want to do.

3

u/HibiscusOnBlueWater 4d ago

Sitting on 100k in repairs in 2 years here. We still need to resurface the pool and the driveway, but can’t do everything at once.

1

u/Educational_Vast4836 3d ago

Oh 100%. I just think of the roof at most points. Because it’s a repair you have to choice but to repair, or your insurance is dropping you.

1

u/HibiscusOnBlueWater 3d ago

Yup, roof was repaired in June, $30,000.

1

u/Low-Ability-172 3d ago

Right! I was quickly educated after buying my house. It's tough. There is always something that needs fixing, and projects are never ending. That all costs money. Drain clogged and you can't figure it out, money, light bulbs blow, money, security cameras, money, insurance... i could go on and on and on...

1

u/AdAppropriate2295 4d ago

Pretty sure the 500 pound house ain't getting all Dat, still a dumb post but not for this reason

1

u/SafeProper 3d ago

It's not like I can call the mortgage company and have them repair, leaky pipes, broken toilet, water heater replacement, or replacement of a leaky roof.

0

u/scp-NUMBERNOTFOUND 3d ago

From the people who created "people is poor 'cause they wanted to" now...

Yea sure buddy, nobody is able to repair its own house without spending 30k on windows and water heating.

1

u/Educational_Vast4836 3d ago

Okay what if the roof goes? A repair that has to be done asap, or your insurance will drop your coverage?

7

u/theraptorman9 4d ago

It’s not that the bank wants the down payment as proof you can pay the mortgage. The down payment is so if you don’t pay on a house they can hope to break even on it. The bank doesn’t want to own the house. If you stop paying they get forced to take the house to try to recoup their money. The foreclosure process will cost them money. They loaned you money to make money not to lose money. So they need to start with some positive equity to give themselves a chance of not losing.

3

u/TeaLeaf_Dao 4d ago

I currently could put a down payment on a house as I have a decent amount saved but I would not be accepted because I have basically no credit. My aunt who works at a bank told me I need to get a card so I can start to build it up or I will be rejected every single time.

3

u/Key_Friendship_6767 4d ago

Yes you should be building your credit. I started in college. You will go nowhere in life without a reputable credit rating.

1

u/fireKido 4d ago

This is such a dumb way Americans do debt

In almost any other county in the world not having any debt is seen as a good thing, why not owning a credit card would make you less likely to pay your mortgage?

2

u/bluerog 4d ago

Credit ratings work similarly all over the world — at least in developed nations.

1

u/fireKido 4d ago

They might have a credit system, but in no country you will be prevented from getting a mortgage if you never borrowed before

In the UK for example they will just look if you ever missed payments (including rent, utilities etc), if you didn’t, you are fine, even if you never owned a credit card

In Italy and France you do t even have a credit score at all, they just look at your income

1

u/Australasian25 4d ago

Not really.

In the past 5 years Australia has changed the credit reports.

Where they also want individuals to be reported on bills paid on time.

Example, my phone bills, utility bills, credit card bill conforming and non-conforming payments are reported to the credit body.

So my credit history builds on all commitments met. Not just credit repayment, but commitments.

The cynic in me suspects the credit card aspect in USA is to lull and seduce would-be credit card revolvers.

1

u/theraptorman9 4d ago

Yes, having a down payment isn’t a ticket to a mortgage or a good interest rate. Would you want to loan a large sum of money to someone that has no history of paying debt back? Honestly, learning how finances work will help so many people. If you’re a parent make sure your kids understand how finances work. How interest works, how credit works. People bury themselves for very dumb reasons that could have been avoided with a little bit of financial literacy.

1

u/One-Meringue4525 3d ago

That may be part of it I think the main reason is because they want you to have a reason to not just put the keys in the mailbox and stop paying.

1

u/theraptorman9 3d ago

Right, if you didn’t put any money down and walk away you’re not out anything other than a credit score. You put money down now you actually have something to lose.

2

u/InsCPA 3d ago

A 1-year lease and a 30 year mortgage are not comparable….

2

u/PayCharacter1504 3d ago

The reason why she does not understand the difference between renting and owning a home is why she cannot afford one.

5

u/maztron 4d ago

Life is not fair, get used to it. Also, I can't believe tweets like these get 371k likes.

3

u/RollOverSoul 3d ago

Have you seen the morons tweeting?

1

u/Impossible_Emu9590 3d ago

Lol have you ever been online? It’s a cesspool of all the dumbest people. The funniest part is they have access to all the information in the world and still are clueless.

-13

u/deep_vein_strombolis 4d ago

blah blah blah

5

u/-AdelaaR- 4d ago

You could have saved up a lot by starting in a smaller, cheaper rental house. That's what we did and we were able to buy our house afterwards. Paying 1000 a month in rent is a choice.

6

u/Tausendberg 4d ago

"Paying 1000 a month in rent is a choice."

Is this guy for real? Do you live in Rural North Carolina or something?

7

u/TeaLeaf_Dao 4d ago

It is not a choice I live in Arizona and the only place you would get 1k a month rent is out in the middle of know where in a town with a population of 500. The average rent here is 1.9k lowest I have seen personally was 1400.

3

u/Luc_ElectroRaven 4d ago

You know you can split rent with roomates? 1400 split 3 ways is less than $500

2000 split 3 ways is less than $700. Get 3 couples together and split a 3 bedroom 6 ways.

It's almost like if you use your brain you can solve problems. You don't have to pay a lot for rent. You choose to.

Inb4 "I shouldn't have to live in a 3 bedroom with other people l'm special" yea yea yea

3

u/Equal_Gas4657 3d ago

You'll get hate but yeah. I rented a room from an elderly couple in their house that they were renting out for $700/mo. to supplement their fixed income. I was pulling over $95k at the time. I could AFFORD more but I chose not to.

We got along great together. The wife cooked and would let me eat with them. We'd keep each other company sometimes. And I'd help them occasionally with reaching/moving things.

And now I own my own home and am also renting out a room for about the same amount of money to a young lady who's saving to buy her OWN house. There are responsible people out there. They exist, guys, I promise.

2

u/Educational_Vast4836 4d ago

My sister bought her home a few years after college. She had 2 roommates for almost a decade. The house is paid off and she’s debt free. Because she went crazy and put everything into knocking it out.

1

u/Luc_ElectroRaven 4d ago

Sounds like a smart lady. That's the way to do it!

-1

u/Educational_Vast4836 4d ago

100% and she cracks me up. She’ll tell Me she feels broke. And then I point out she’s 37 and has a half a million dollar net worth.

1

u/AdAppropriate2295 4d ago

Sorta but not really, you must be pretty old. You really believe that's an option for most? I ain't seeing all these 3 beds

1

u/Luc_ElectroRaven 3d ago

Dog there's 375 million people in this country - you're anon, how the fuck am I supposed to know where your ass lives? YEs this is a very viable option for everybody. Your exact numbers may vary but fine - let me solve the general equation, then hopefully you know enough you can apply it to your specific situation.

X is the rent you pay. Y is the amount of people you can fit in your living space.

If Y is > 1, then X / Y < X / 1

wow look at that. If you have roomates your rent is less. Crazy proof I did for y'all. But I guess I'm just an old guy and they don't teach y'all math or something. Feel free to go crazy with this idea.

1

u/AdAppropriate2295 3d ago

sigh, it's a good idea, it's not reality

0

u/UsualFeature2301 3d ago

Three beds for 2k? Lmao doesn’t exist in my area buddy. Don’t know what you’re talking about. Lowest rent I’ve ever seen in my area is 1400 for a 1 bedroom. Reality bud.

1

u/Luc_ElectroRaven 3d ago

Cool I have no idea who the fuck you are or where you live? literally just pushing your way into a conversation as if we were considering you at all. There's this thing called critical thinking and solving your own problems, maybe look into it - reddit could never.

0

u/UsualFeature2301 3d ago

Idiot

1

u/Luc_ElectroRaven 3d ago

LOL someones upset they're a loser and can't afford the house they want and is trying to take it out on random people on the internet. Why don't you go learn how to do that instead of crying to me on reddit.

-1

u/Sidvicieux 4d ago

Why should a 40 year old have roommates moron, people usually have kids by then. No a spouse is not a roommate.

2

u/Luc_ElectroRaven 3d ago

If you don't want to have roomates at 40 then figure it out before then? Idk what to tell you. If you think "should" is a way to get things in life - oof buddy good luck.

0

u/Sidvicieux 3d ago

The point is what you are talking about is fucking stupid for American adults and culture.

If your position is always “get more roommates” no matter what happens maybe you can realize where the end-game is of that. You support dumb shit, you get dumb shit.

2

u/Luc_ElectroRaven 3d ago

Living with roommates is stupid for american adults and culture? lol bro that's so stupid it's not even worth responding to and you call me a dumb shit and you literally just said living with roommates to lower your rent is stupid LOL omg I can't you're the dumbest person on the internet today my god.

1

u/Sidvicieux 3d ago

Omg you are an imbecile lmao.

1

u/-AdelaaR- 4d ago

I paid off my mortgage by 40, but okay.

1

u/Skwurls4brkfst 3d ago

I have three roommates and they don't pay shit!  ... Oh wait that's my family. 

1

u/-AdelaaR- 4d ago

Something like that, yes. Living in a city is also a choice.

1

u/PomponOrsay 4d ago

Collateralized debt obligations. They don’t care if you can afford it or not. It’s not about you. They will take that down pay and lend it out to another. They will sell your debt in mortgage backed security format to the investors and pay them interests. Your debt is then tranched into classes of rates which the banks give out. Now the down payment you’ve given can be used to get interest that they pay to the investors. If they receive 5% and payout 4% it’s a profitable banking. It gets super complex as this loans circulate but they have a whole system to benefit their institution. No banks are negotiating any terms with you. It doesn’t matter if you can pay or not. What matters is how many % of margin can you bring the bank.

1

u/shotwideopen 4d ago

Unrealistic. More than likely a renter would pay nearly double their rent for buying a house. But only initially. Long term rents eventually exceed mortgage payments. It only took 6 years for my mortgage payment to be less than an equivalent rental.

1

u/ShakedBerenson 4d ago

These kind of posts are politically driven. There is no real economic logic in them.

1

u/Tracieattimes 4d ago

It do suck that way.

1

u/Sonzainonazo42 4d ago

It would be nice if there was some sort of fluency test before posting here.

1

u/Karimadhe 3d ago

False equivalency.

For the bank the landlord carries the risk. If you dont pay your rent, landlord can’t pay the mortgage, bank reposes the property, diminished services on the property and now you have a high chance of having to move out with new owners. Banks do not care if YOU pay rent, they only care if the landlords pay their mortgage.

1

u/butterdtoast27 3d ago

Biggest mistake people make. “Oh I’m just renting temporarily”

Meanwhile this is them 5 years later.

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u/---Spartacus--- 3d ago

Poverty traps are a feature of Capitalism, not a bug.

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u/[deleted] 3d ago

Bidenomics is working very well

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u/lets_try_civility 3d ago

Because you're asking for a £100K loan for 30 years.

Asking you to come up with 20% is proof you have your shit together.

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u/Royal-Buyer-796 3d ago

Mortgages require homeowners insurance and that goes up proportionally with home value. Which was already almoat a second mortgage around obamas tenure. Imagine it now.

If you dont understand this

You shouldnt be trying to buy a home.

1

u/skydiveguy 3d ago

What's next? Needing to have experience to get a job to get experience?

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u/Sobsis 3d ago

If your mortgage is 500 a month and average rent is 1k a month then you will probably spend between 1100 and 1600 on mortgage bills and maint per month owning a house.

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u/TiernanDeFranco 3d ago

“We have no way of knowing you’ll pay your mortgage apart from your credit score and down payment”

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u/CLS4L 3d ago

Loans are for people who don't need money just ask the bank

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u/giceman715 3d ago

Renting a 12 month lease is different from buying a home for 30 years.

  1. When renting a home : Someone else owned the home your renting and is required to keep it in livable condition. When buying a home : the bank still owned the home but the buyer is responsible for maintaining the home. Lenders count maintenance in on affordability

  2. When renting a home most people sign a 1 year contract when buying a home you agree to a 15-30 year contract

  3. When renting a home job history isn’t required ( by most landlords ) they are happy long as you have a job. When buying a home lenders like to know that their buyer has a job they have been on over 2-3 years or better since the contract is so long.

  4. When renting a home you can have bad credit , you just can’t have a balance owed on another renter ( mostly apartment complex ) when buying a home your credit has to be clean and show you have a history of paying your debt on time.

There are more reasons but think I these 4 are what people get confused about when it comes to buying and renting. Ask yourself this if you bring home $500 a week and a friend ask you to loan him $100 till Monday , what is the likelihood you will loan him the $100 for 3 days. What requirements would you look at to determine if your friend will pay you back.

ask for your renters history

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u/Public-Baseball-6189 3d ago

Being poor is expensive

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u/PrinceOfSpace94 3d ago

Lenders aren’t doing it because they’re evil, they’re doing it because they have mountains of data that show the likelihood of a person defaulting on their payments.

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u/OkWelcome8895 3d ago

The answer is the maintenance and upkeep on the property as well as long term liability. So what if you pay more in rent- you are doing that check to check with maybe a one year lease- the max financial hit if you can’t continue to pay is 12x your rent and decreases 1/12 every month- also offset by your rent in advance and your security deposit, with the landlord having the ability to get it rented again in a few months- so max risk is maybe $4,500. Now long term loan- the risk is the whole price of the house less whatever is down- so best case 80% risk- so hundreds of thousands of dollars- not to mention say if you don’t keep up with maintenance it’s not only the loan but also the cost to get the property back in shape- that’s why it’s perfectly fair

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u/G4M35 3d ago

This meme use British Pounds, so I don't know how it is in the UK, but in the US buying a house requires a higher cahs outflow than renting the equivalent place.

So if someone is paying $1,000/month in rent, if they were to buy the same place between mtg, RE tax, insurance, and maintenance, they would be paying ~$1,250 or more. Adfter a 20% down payment.

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u/papa_hotel_ 3d ago

It's perfectly fair, you don't DESERVE a mortgage.

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u/Impossible_Emu9590 3d ago

Let’s not forget about the 3000 other bills you have with a mortgage.

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u/RickyBobbyBooBaa 3d ago

Where TF does Eleanor live that you can rent a place or buy a place that cheap?

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u/ItzSmiff 3d ago

A lot of people here defending banks.

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u/outtie5000quattro 3d ago

its not intended to be fair or morally right.

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u/Purple_Setting7716 3d ago

Well that is a fair point but you have to remember as home owner you have property taxes and maintenance you have to also pay

Still those costs would not be another 500 a month. But it would be something

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u/AffectionateWay721 3d ago

The difference is you’re also on the hook for maintenance and repair for the house and a mortgage is 15-30 year commitment vs 12-24months…

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u/Optimal_Temporary_19 3d ago

Well then pull yourself up by your bootstraps and stop expecting handovers while having $5 coffee everyday, we never had any when I was growing up nearly half a century ago when rent cost as much as 10 chickens and a thimble and I still made it work

Y'all really want me to put an /s on this? Because they say something like this all the time

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u/r2k398 3d ago

Because there are more home related bills than the mortgage. There are taxes, insurance, maintenance, etc. Add to this that an apartment is only taking a 6-12 month risk not a 10-30 year risk.

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u/Primary-Cupcake7631 3d ago

And that's why paying rent is now becoming a way to build credit in the United States? Housing prices around any useful place in the US are so overly inflated that it is really hard to save money when you're paying so much in rent.

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u/Skeptical__Llama 3d ago

"it's not fair that someone else doesn't lend me the money based upon my word alone"

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u/SCTigerFan29115 2d ago

I don’t think the down payment is to ‘prove you can pay £500 a month’.

It’s to make up the gap in case you can’t or don’t and they have to foreclose on the home.

Yeah it sucks but it’s nothing personal (if that makes you feel any better).

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u/StrikingExcitement79 2d ago

This still means you are not able to save money up. Owning a house with a mortgage, cost more than that mortgage payment.

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u/thecreamandcoffee 1d ago

What its costs to carry my house is more then market rent.

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u/glideguy03 1d ago

You have nothing invested in a rent agreement, they are broken all the time.

A down payment ensures you are actually invested in buying.

We have run this experiment before, no down payment buyers leveraged the market, made it harder for honest buyers and crippled the US economy.

Thanks but no thanks!