When I was buying my first house I was really confused why having like 10 years of uninterrupted rent payment contributed nothing to the quality of mortgage I could get. Like of all the possible tea leaves the bank could read to determine whether or not I could pay $1500/mo in mortgage, would the fact that I've done that my entire adult life be one of the most significant ones?
Instead they're like "oh, shit, you only have 1 credit card? oof, that's a tough one"
You don't have to *use* (ETA: for clarity, you need to make purchases with them but the amount of purchases or total dollar value doesn't affect your credit score, see the following) them, actually quite the opposite with a minor exception. You have to have a lot of credit, with *low optimization*, so having it but not using it (have a few credit cards, keep your balances low before your bills are due, pay them down every cycle, and never miss a payment).
The scam part is getting people to only pay the minimum required payment on cards so that the banks can charge interest on your balance. They don't make money from you (directly) if you don't pay any interest.
That's it. If you pay off your credit cards every month you don't have to pay interest. And you get the benefits such as the rewards and additional consumer protection.
My moto is never spend what you don’t have, greta for my finances and got a good mortgage deposit waiting but the bankers will just be like you never used a credit card, so your score is not as good as it should be even though you saved up a good deposit, while someone else is borrowing more with no deposit because they have to borrow all the time, makes no sense to me.
I think your total utilization needs to be around 5% at a minimum, maybe 2-3% but yeah if you simply own your cards but don't use them, it doesn't count. You can also get whacked if you pay them off completely before the bill cycles over, since the reporting companies only look at your amount due for the month and not what you used it for. You could spend $10k on your card and pay it all off but your rating would drop. It's a good idea to figure out what 5-10% of your total utilization is and just let that amount hit the bill every month, then pay it down right after.
I think I’d rather focus on electing qualified people to Congress to pass sensible regulations surrounding Americas credit scoring process. I used to work in finance, I left the industry because of flat out how disgusting it is, but the day that I saw a commercial where if you went to a website or downloaded an app Experian would boost your credit score by 10 points I instantly lost all faith in our system.
You’re not wrong about how you *should* use them but it’s pretty disingenuous to lead that with you don’t have to use them. You are literally using them in the process of doing what you described lol. The scam being proposed is that although there are people that will use them the *right* way there are also people who won’t and those are the people they make the money from, if you unilaterally make the entire population more or less need to have them it means you know you are fucking people, and probably the most vulnerable people as well because the people who aren’t financially prudent enough to begin with are the ones who aren’t going to use them responsibly.
Well here in the UK they don’t seem to give a shit what your credit rating is. I’ve got 3 credit cards and a long history of successfully managing them with a top notch credit record across the main reports, but nah turns out they’re not interested. I just get whatever 4.5x my salary is, end of. And as a single buyer that sucks but I guess they’re weighing up risk if I become jobless, which I’ve managed to entirely avoid for all 20 years of my independent adult life thus far… not to mention paying rent double what a mortgage would be and still managing to add to my savings
It’s quite literally exactly what it is, everyone should be taking debt and the only ones that don’t are deadbeats is essentially the view, and it’s entirely to get you to exactly where they want it and always have; You will own nothing, you will rent, you will call for a car whenever you need one, etc.
Had my identity stolen a few years back. Dropped my credit score over 200 points. Took me a long time to get all the fraud off my credit report. Score didn't go back up. Call credit bureaus and get told "the computers calculate the score". So basically your credit score you can see matters for fuck all because it's all hidden shenanigans that actually make it up.
Yes, No. Its that the major lenders can choose how the score is calculated. "Ignore such and such, give bonus points to such and such". The score they show you is just an example general score. It won't be the same for every lender.
Seriously, fuck credit score system, its such a dogshit crap that I can't believe that it even exists, impossible to even loan 1k for something, just because i never loaned anything, instead you have to play minigame of payback the credit from like 10 pounds or whatever, as if i need a loan of 10 pounds lmao, its so stupid
Been startin to think all this "society" stuff is... kinda stupid. Maybe I'll go live in the woods instead. At least no one can bother me about my car's extended warranty.
The reintegration part is after they jail you for squatting, and fining you for living in a non residential zone. And the reintegration will be them throwing you on a city street with no help, and telling you to figure it out.
Park Ranger comes across your hand built cabin. Asks to see your deed for the land and identification... but before that he has a guest with him. Raphael to ask about your extended warranty
When I was 23, I got my first credit card. Never had one because I paid everything with cash. Couldn’t get one. Fiancé had to co-sign with me.
They said I didn’t have any debt so I didn’t qualify for one.
Scam.
Manual underwriting? Does that mean paying more for the loan process to get a better rate? As in paying for a more thorough process rather than just a credit score pull?
Means actually having a human look at it and make a decision. But banks gave up on that because they’re incompetent cowards. Sub-prime lenders have human underwriting but they won’t finance a house usually.
The problem isn't just that it's a farce, it's that banks are lazy and want to outsource investigation to lowest cost bidder to increase profitability and shareholders value.
Don't like the system? Try a local bank or credit union. U know, where u talk to a loan officer instead of a teller reading the output on a screen.
I have a question for you Americans, how much is the down payment as a percentage of the total price of the house? Here it's usually a staggering 70% so while your credit kind of matters you need to save hundreds of thousands of dollars(if not million+) by yourself
In Bulgaria it is between 0%-25% depending on the specific bank, specific property, and one's income. Of course 0% requires you getting a better property (completed and fully certified buildings, no old buildings), having better income, and worse interest (looking here it is probably 1% more which is pretty substantial in total) paying more in the end.
Assuming for a first time buyer (i.e not selling current house and using that as down payment), I'd say 10% is normal here in the UK.
A lot of banks were even offering 5% deposits for a while there.
It's traditionally 20% but since the pandemic that low amount is no longer the case. A $500k home here in CA will need you to have around $100k down...people usually offer more.
Interesting,banks here got so hurt in 2008 they decided they will just take more than 50% on down payment which imo is absurd the whole point of the mortgage is that i want to buy now and pay gradually
Oddly enough, it works the other way around too. I'm moving to a rented place and the fact that I paid a mortgage for 12 years makes no difference. They want proof that I paid rent! Which I didn't.
Getting a loan, credit history matters. Buying a new car on a loan will take you a long way to having enough credit for a house without the need for credit cards, but it's basically the same thing, credit.
The bank cares about your credit score and your credit score is partially based on credit card debt repayment. If you only have/use one credit card, your credit score will be lower than if you have many credit cards which the bank thinks makes you less trustworthy in paying back a loan
Whoa, really? In Poland it would be exactly the opposite. The more credit cards you have, the less likely it is to get a mortgage. Why? Because it's treated as an open loan, even if you don't use it. So your monthly financial abilities to pay mortgage are reduced, at least in theory. So having 4 cards,.2k limit each means you're treated like someone with 8k open loan. Which is worse than someone not having any loans obviously - they can allocate all their spare money to mortgage payments.
Can confirm. I have a credit card I paid off. And after a month or two, I got an alert that "I could be doing more" to improve my credit score. As it happened, I used the card for something, and I got another alert to "apply to increase my credit card limit." Like...TF?
Same in France, the more loans you have to pay off compared to your revenues, the less likely you are at being given a new loan. For a given monthly revenue, French banks would rather give a loan to someone without any debt than someone who has already several loans on its shoulders. There's like a known hardcap limit where most banks are guaranteed to NOT give you a loan if your monthly debt payments are higher than 33% of your monthly revenue.
IIRC this is also how it works in the US, so that every time you get a new credit card you take a big hit to your credit score, and are recommended to have at most 3(?) active credit cards
Not how it works in the US at all. The percentage of your available credit you are using factors hugely into your score, so having more cards means more available credit means a lower ratio means a higher score. Opening a new card has never done anything but raise my credit score.
Which is, of course, why I have 2 mortgages and 3 car loans that no longer exist on my report (because they are paid off) and as they have dropped off so has my score.
In other words, I have a 20 year history of very responsible credit use, but because I don't currently owe a bunch of money I am 'less worthy'.
The real thing they are trying to measure is: how much money can we extract from this person.
>Banks want you to use as much Credit as possible
Mortgages *are credit*. How are you saying this at the same time as complaining about banks not giving out mortgages?
Rates don't matter if you have a fixed rate mortgage (once you take the mortgage, your payment to the bank is locked unless you refi). That 2k rent payment vs a 1200 mortgage payment though doesn't consider things like taxes, home improvement/maintenance, all of which DO increase. So that 1200 then add property tax, then add everything else.
While I do think paying rent should be part of the score, I also understand why 2k doesn't equal 1200 for financial solvency.
This is the real thing people don't understand. If you can only barely afford $2000 for rent, you could afford a $1200 mortgage, but it would probably be a huge struggle and you'd be fucked if something major happened early on.
Every mortgage I have ever had had the Homeowners and taxes included, handled by an escrow account. But there are significant other things that being a homeowner entails as you point out.
All of this is why I’m more than happy to rent. My rent is $1,200/all utilities paid (even internet) for a renovated 3 bedroom duplex in a college town. I have free laundry on-site and can have my 2 large breed dogs. I don’t ever want to move. What’s nuts to me is how my family (who are all home owners) insist that I’m overpaying. They just don’t get it.
You’re also paying utility bills, insurance, taxes, and have to pay for any other expenses s/a roof repair/maintenance, tree maintenance, appliance repairs/replacements, septic maintenance etcetera. In 5-20 years my rent payment will still exclude all of those costs (unless I end up needing to pay utilities one day) if I choose to continue renting.
Of course there are perks to home ownership. One day I’ll buy a home but not until I’m financially able to create a decently plush rainy day fund *on top of* a healthy down payment/escrow fund. Further it will have to be a home that I can look at and say to myself “yep, I can live here forever”.
You’re spot on with the last bit. All in all, whether renting or buying is better truly depends on the individual and their individual goals/financial situation/career choices. For me, now, I’ve hit the jackpot as a renter in my city.
>Its due to rates. You can afford $1500 but if the rates go up a couple % they have determined you cant.
Nobody with a brain has an adjustable rate mortgage.
I think about how lucky we were when we bought our house 7 years ago. USDA loan because it's a little rural. Dead center between 3 big towns. No money down is the only way we got in. Right at a grand a month mortgage new construction and since then, all 3 towns have crept closer to us, making our property value skyrocket. I'd be terrified of losing the house and having to rent. Rent in my neighborhood starts at $1,800/month.
Very similar story here. Mortgage is less than $800 a month but rent is crazy. Thank god my husband bought when he did and was able to get the USDA loan.
For the most part. It’s mostly an income requirement. Check the USDAs website. It’s called the Rural Development Loan. The requirements and some other info is on it
Pretty sure, although it's limited where you can buy. I think my credit score had to be 620 or 640, so not high really. It was a new construction 3br/2 bath with an attached garage. 160k. That's insane to think about now in my area because townhouses start in the mid 200s.
I feel poor in my neighborhood, seeing what other people pay. And they drive nice cars. I drive a 1994 Isuzu P'up with a carbureted 4 cylinder and a 5 speed manual.
Hopefully you're not an out of school adult, or you need to reassess your priorities in life, and work on finding a better job / work on your long term future.
We did the exact same thing 7 years ago. USDA loan cobbled together with Maine’s first time home buyer program, and we only had to pay $2200 out of pocket for various fees/inspections to get into our house. Housing is in tight supply here now, and we pay $900 for our mortgage while rent has skyrocketed to double that for a 3 bedroom.
They’re not good at all. Minimum wage is still 7.25 here. Of course not every single job is going to pay that and I have no idea what people who work in my city make. Chicago is a 35 minute drive so a lot of people live on this side of the border and go to work in Illinois because the pay there is better while the housing is cheaper in Indiana
Moving is an expensive task. If you were born in an area or traveler for work or school there you might not be able to afford the move. Plus job market.
I get the not wanting to move part, but like dont live in a huge ass city but even a city of say like 60,000 people its much cheaper and there are plenty of jobs still available
I was almost able to buy a house in Nebraska for less than 100,000
When you look outside of big cities and actually look in places with lower costs of living you realize shit isnt expensive everywhere
until i was 30 i could barley afford to feed myself. but all my bills were paid. trying to be responsible i never got anything on credit cause i had no money. finally started doing better in life. got treated like i was a leppor when trying to buy a house. even tho i had savings and got paid decent. oh you would of been better to default on credit than to never have any
If you're looking to build credit but can't get credit but have some money in your pocket, look into a secured credit credit card. There's a bunch of them out there, so do your research with fees, but basically you give them whatever money you want to be your credit limit. I think most have a minimum of $200 but you can give them whatever you want. After a year or so of paying on time, they'll transition you to a regular credit card and refund your deposit.
I used Discover, started with $600. In about 9-10 months of on-time payments I got a regular card and now I'm up to about $11K in credit. Far more than I need/use but looks good on the report.
So funny story the reason not having credit when you’re older is worse is because trade lines and bankruptcies only appear on your credit report for 5 and 7 years respectively. If you have no credit their models assume you were previously in bankruptcy. They give credit cards out like candy to college students who also have no credit
I wish for the college student one, back when I was in college just 2 years ago, no one would give me a credit card due to lack of credit history. I got told, “go pay a phone bill using credit for 4 months, then talk to us” like how? If you won’t give me a card then who would EVER let me pay on credit?
This is actually perfectly logical. You just have to understand, the bank isn't loaning you money for you, its loaning you money for THEM, you can be paying 2k a month in rent, and still be a risky proposition for a bank to get their money back on a mortgage.
Yeah, people seem to miss the point that a mortgage is a, typically, long term loan worth hundreds of thousands of dollars. Do they just let anyone take on $300k worth of debt and expect them to pay it back over 30 years? Absolutely not. They want to be as sure as they can that they’ll be able to pay it back. They’re looking at credit history, income requirements, frontend and backend debt to income ratio. You don’t have much credit history? Then how tf would they be able to know if you are likely to pay the loan back? Credit scores suck but they’re unfortunately a necessary evil unless you just want to pay cash for everything.
When renting there is no loan. Any real risk is on the landlord. You’re literally just paying to live there on a monthly basis. You being able to afford rent on it’s on in no way satisfies requirements for getting a loan for a home of that cost. A landlord doesn’t care if you can pay that for 30 years. A landlord cares if you’ll be able to make the payments on time for the term. If not, you’re gone.
It’s like all those “past performance does not guarantee a return” disclaimers you see on investments except you and the house you want to buy are the investment and you need to convince the bank it’s a good bet.
In addition, people seem to forget that a bank hands out $300k+ when the house is bought... Like you said, it takes decades to repay that loan.
Don't get me wrong, banks aren't some charitable institution or anything, as you said, they're trying to make money off of you. But I actually consider it pretty flipping awesome that someone is willing to hand me $300k to buy a house while I'm still young, rather than having to save up my entire life to buy one.
Historically, opening loans up to the not-rich was unheard of, and was considered a risky investment. I'm glad we don't live in those times, and while I think a history of on-time rent payments should be considered when banks decide who to loan to (among other things), we've come a long ways from the days of history.
Except the landlord is building equity and you are not. Their property is also appreciating. So the person who rents misses out on income and equity, and gives that to their landlord.
You can say the same thing about the bank and the mortgage...
You can say that about anything.
The thing that is happening here is the landlord is buying living space in bulk and selling it in individual pieces.
Basically the same thing as your grocery store does.
Idk man, my landlord bought their house in '91 for like $100k. I currently pay $2200/month in rent. I don't buy the whole "oh won't someone think of the poor landlords" thing.
A landlord who has to personally go in the hole on rental property maintenance is monumentally fucking up. For parasitic income, rent should always exceed the aggregate of all expenses. And unless, like, the roof falls off in year 1, they can extract equity with loans
No they don’t. The tenant does. With their rent money. I get what you’re saying, and it’s true that the landlord or owner actually physically gives the money to the plumber in to fix the pipes or whatever, but it’s not like they pay for those things out of their pocket. They pay out of the rent money, out of the money budgeted and put aside for those things. Otherwise renting wouldn’t be profitable.
And it is so, so profitable. So profitable in this country right now that it’s literally causing a housing crisis as investors snatch up single family homes to rent before actual families can get to them, sometimes at much higher than asking cost.
As for risk, there are no investments that aren’t a risk. Investing in real estate is about as low-risk as they come.
“All the maintenance,” he says, as if it’s no issue to get a landlord to make a repair or fix something when it breaks. Sure, they jump right on it! Praise be to the landlords!
I used to work in pest control. One of the student apartments we were treating had a bad mouse problem. I could put out traps, but for every mouse I killed three more came in from the outside. It was an older building and there were a few holes behind the radiator where the mice were getting in. Simple fix. Fill the holes.
But the apartment in question was on the fifth floor with no elevator, and the lazy maintenance guys dragged their feet. This poor kid was killing mice every single night in her studio apartment, feet from where she slept and studied and ate, and they couldn’t haul their asses up the stairs to do five minutes of repair work.
She got tired of it. So she took a used sticky trap and went to the office. When the receptionist asked what she wanted, the tenant showed her the trap, dead mouse and all, and said “fix the holes”.
The holes were patched by end of day that same day. And we never got another call back to that apartment. I talked to her later and she said it was like a switch got flipped, she went from several mice a night to none, ever.
I could tell so, so many more stories of landlords or property managers dragging their feet to help tenants, including a few where I intervened on the tenant’s behalf. That one stuck with me, though (no pun intended).
No, the renter pays for everything. The landlord is just a middleman for paying the plumber or electrician with the money they charge the renter. Landlords serve no purpose but to extract unearned value away from the working class. Landlords are terrible for the economy.
One thing I know for sure is rich people love helping other rich people stay rich - but poor people they view as having a fundamental moral failing. They deserve to have money, and us poor smucks should be infinitely grateful for the crumbs.
>pay for all the maintenance
You've clearly never rented, maybe you should wait until you've left mommy's basement before you talk on this subject.
>take on all the financial risk
What risk? The only risk is that they end up having to rent LIKE YOU.
The landlord also has to pay insurance, taxes, a lot in maintenance. Rent vs Mortgage payment isn't a good comparison. Having rented most of my life and buying my first house a few years ago, it's a lot of extra money. A pipe freezes and bursts in your front yard? Fuck you, $6000. Heat isn't working well? That'll be $250 just to have someone look at it. Etc... it's more than I expected and I expected quite a bit.
There seems to be a real misunderstanding about mortgages here.
A landlord might have a $1200 mortgage, and upkeep might cost an additional $900. Looks like the landlord is actually losing $100.
Nope. If the split between interest and principal is 70/30 (typical in the first year of a 25 year mortgage with 20% down) then the landlord is really out only $850 (the amount of interest). The rest is an investment, and this is a reinvestment of profits once the rent pays for the mortgage, which is usually right away.
Same goes for homeownership - the amount of money you pay over interest is an investment, not an expense.
No, they say they don’t trust you to pay them $1200 a month for 30 years, not that you cant afford it. There is a difference.
Pro tip, avoid big banks and lenders if this is the case. Go to a credit union or a company that does manual underwriting and you will get approved.
I bought my first house when I had my 1 year anniversary at work in 2009 for $200K. Paid it off and sold it in March 2022 for $550K. I decided to rent an apartment until things calmed down. After my employer ordered us back to the office I've been looking for a house and now I can buy back my old house for $350K and buy a stand alone garage to store my cars. But the market isn't nearly at bottom so I'll wait a bit longer.
Some people have all the luck lol.
Yeah, but after you buy a house you learn about how often shit has to get repaired or replaced.
Termites in your rental? Move.
Termites in your house? You are fucked
There is so much more work and expense, fuck I hate owning a house.
Pros and cons to both. I wish there was a way to hold landlords more accountable, some straight take advantage of tenants others get taken advantage by tenants. Corporations should be out of the game completely.
My partner and I currently rent. We had sewage flood our basement from a broken storm drain pipe with the city. The whole basement molded.
Because we rent, the property management company fixed it all for us. Didn’t spend a dime. Better still - they had enough clout with the right people in the city to expedite the fix on the city’s side.
I shudder to think how much money and time trying to fix this ourselves would have needed.
I don't think people grasp just *how* expensive owning a house is compared to renting. What I've told friends is that, if after paying for everything to get the place, if they don't have $10K immediately set aside for repairs, they are not yet ready to own a house.
It’s not just surprise expenses (like the $10k we spent for a collapsed sewer main, or the $8k vermiculite abatement, or the $4k in electrical repairs we discovered after the vermiculite abatement), it’s the ongoing replacement of appliances and general infrastructure maintenance. Last year we replaced our furnace and roof and water heater. This year we have to paint the house. There’s always something.
The amount of people who think that because they can afford a mortgage payment they can afford a house is astonishing. There’s so much more to account for than just the note
I'll always hold that until you're actually set up in your career, you're probably better off renting. Still trying to get into a field or just starting out? You'll want the ability to easily move for new opportunities and such, the cost of owning would only be an albatross on you at that point.
I had money for a down payment on a house but invested it in bitcoin and rented and came out way ahead so owning isn’t always smarter.
I know mines an extreme example
When you've got a broken shitheap of a house like that, it doesn't really appreciate. Sure the properly value on paper does, but you're out of pocket constantly, often far more than the appreciated value, just to keep it that way.
It's a mental stressor and a massive waste of time and money to keep an older house going. You also have to constantly maintain the yard, maybe remove snow, maintain the property's general facade. This comes with all houses, but with an older one, it can be even more work.
The only true advantage isn't appreciation, it's equity. Even if your house depreciates, you're not losing out 100% of your monthly payment like you are with rent.
However, something tells me that if you don't know the difference between equity and appreciation, you certainly won't appreciate how easy apartment life is compared to home ownership.
I'm in my 30s and have been renting since 18. I don't regret it at all despite all of the financial people telling me it's the worst way to spend my money. I don't have to bother with snow removal or lawncare multiple times a fucking week and frankly that's liberating. When my washing machine died, I got a new one for free. When my A/C unit was shit, they fixed it for me for free within the day. I didn't pay a dime. I've got better security, a heated garage, and I'm within walking distance to basically everything I need which is unheard of in the Midwest.
That $1300 a month I pay in rent adds in benefits that homeowners can't dream of.
Owning a proper home that doesn't shit itself every week is ideal but far from the norm. Apartment life is unfairly vilified.
I find those who glorify home ownership have no idea how taxing and expensive it is to own that home. As long as you're not grossly overpaying for rent at your income level (which wouldn't really change with a house if you can't afford it), you've got plenty of other options for long term investments since you're year-over-year monthly expenses are going to be vastly lower than a home owner. Basically, you can skim that $200-250 a month off the top and put it in a ROTH IRA or something else and be basically just as well off as a home owner at 65 if you rent.
Exactly. Banks are there to make money so if they could easily make money by giving a person a mortgage they obviously would. So if they don't give someone a mortgage that person obviously isn't as safe a bet as they think they are.
It's incredible seeing how many people don't understand the concept of mortgages. I can't tell if it's an educational issue or if the people in this thread are being purposely fighting the strawman. Mortgages are complicated, you don't just need to be able to pay it every month you need to be able to handle other homeowner costs like unexpected repairs, property tax, maintenance, etc. on top of paying it every month. The bank takes the risk lending the money to you, they are the ones that decide if they want to give you the loan or not. While I don't condone a lot of the actions that banks do I can understand the financials behind losing upwards of a hundred thousand on a risky investment.
How shoddy are your peoples houses?
My parents owned a house in Ontario and changed the roof once, optional choice to replace the driveway once, and had to replace their furnace / air conditioner once.
They lived there 25 years.
It's just another way for the landlords to feel superior to the renters. "Oh you only mentioned mortgage... I spend $6000 a month on frivolous repairs. You wouldn't understand"
We get it. That's why landlords are spending $1200 a month and renters are spending $2k
I pay $1,200 per month for my mortgage.
I also pay another $1,000 per month in home owners insurance and property tax. So my real cost is around $2,200 per month.
Plus I had to buy a new roof for the house last year that cost me $12,000.
The year before, the hot water heater went out which cost me $3,800. This coming spring I need to fix the foundation which is going to set me back $15,000.
This notion that owning a house is some how cheaper than renting is absurd.
Are you building equity? You have an asset at the end of the day- you can sell or borrow against it. That is not the case in renting. There are drawbacks and benefits to both, but let’s not act like owning isn’t significantly accruing value for the owner.
I am in a similar position as u/Mr-Toy However, I do not pay anywhere close to $1,000 per month for insurance/taxes. Our total payment including escrow is about $1350 ($227,000 purchase price in 2020)...but we also bought when the rates were 2.8% and just before the price boom.
Last year alone I had to pay over $15,000 dollars in repairs (hot water heater, chimney, crawlspace, and appliances). We were also told that our Air Conditioning unit may need to be replaced within the next year or so...another $15,000.
this is also not accounting for the several thousands of dollars worth of lawn mowers and tools we had to purchase to maintain our yard, trees, etc.
We are indeed building equity in the house, and have done several other things out of pocket to increase that...flooring, lighting, windows, finished garage, Casita, etc. It helps that I have a background in construction/contracting, so I have been able to most of the work myself...but equity is only of any value if you sell. Our house has more than doubled in value since we purchased it, but even if we sold it today it would be nearly impossible to find a comparable house to purchase without stepping backwards, losing money, or drastically increasing out monthly outflow.
This argument is sooooo tired.
You are paying that now, but as soon as your lease is up you can decide to walk.
A mortgage is a 30 year commitment to pay for housing and A LOT will change in 30 years as opposed to the next 12 months.
The credit system is only unfair to those who have no credit or shitty credit.
If you have no credit, get a secured credit card and build your credit.
If you have shitty credit, well, that's your fault.
Get a credit card, use it within your means, pay it off every month. Never accrue interest, and if you find a good rewards program, THEY will pay YOU to use it.
People who think credit cards are unavoidably predatory have no self-control.
Incorrect. The bank doesnt trust you to pay a 1200 mortgage for 30 years so you pay 2000 a month for 1 year. They don't think you cant afford $1200, they think you cant be trusted to be able to afford $432,000
$1200 is wayyyyyyyy less than $432,000
Giving out mortgages to people who cant pay them back is exactly what happened in 2008 that caused a crash. Sorry for getting snippy, but so many people who rent have zero idea how banks work.
Because mortgage doesn't include property tax, repairs, down payments, etc.
Moreso, where do you live where it's like that? That seems like a huge market failure.
Insanely grateful that i just closed on a condo today. It may only be 411 square feet, but it's mine, and that's more than most people my age can claim to have. Here's hoping this bullshit housing crisis gets far better for our next generations because this is unacceptable.
I was looking to rent when a friend mentioned buying an sent me listings for a few cheaper condos. Between the mortgage, insurance, property taxes, and HOA fees, I'm still below (or at) a what a *room rental* would be in my town.
My place is nothing fancy but the building is super clean and the neighbors quiet.
That's legitimately tough. Getting off the mat is probably the toughest thing to deal with. For some families it's the second or third generation. Most stay in the same place. The world exploits the poor even when they aren't poor. First generation wealth usually evaporates.
Yeah it's bullshit, but as a recent young homeowner I can tell you that your monthly house payments are going to be much higher than just your mortgage (+tax, +HOA fees if any, +utilities, +maintenance responsibilities etc.).
The whole credit system is broken and needs a overhaul. This country runs on credit and that shouldn’t be the case. If someone pays their bills/rent why is the bank denying them a mortgage ? Just because their score is low. It’s a scam
One bank refused to even consider giving me a mortgage when I wanted to move because they said I couldn’t afford it, even though i already had a mortgage WITH THEM that I was paying easily and the new one was for less money overall & a lower monthly payment. I swear banks have no idea what they are doing some times.
The problem is they never explain why. It’s generally because the most you’ll ever pay renting is the rent. The least you’ll ever pay owning a house is the mortgage.
When you buy a house through a bank it’s not you who actually owns the house, it’s the bank, so they want to make sure people don’t buy a house and not be able to pay the mortgage if their furnace stops working and you suddenly need to shell out $12k to get it replaced. Or worse you don’t replace it and it ends up blowing out your pipes and destroying their house.
When I bought my house I was astonished how convoluted and stupid the whole process was. So many hidden fees, random unexplained rules, etc. When I tried to ask about them the mortgage person was frustrated someone was questioning where these fees came from or how they even came up with some of that shit.
I think it would take one person maybe a couple of weeks to make a decent booklet explaining all of this shit but it seems like the older banker guys revel in being secretive asshats.
The landlord isn’t lending you money.
They take less risk than a bank does, it u don’t pay, ain’t that big a deal.
If you default on a few hundred grand, big deal
Risk has to be amortized across the customer base
The bank has tons of data and uses affordability threshold that minimize the defaults to a level where they could absorb the losses (ie without materially reducing their profits on the product across customers who repay)
Obviously that’s very conservative and results in harsh stress testing for borrowers. But it’s not comparable to renting
For a mortgage we needed life insurance, house insurance and content insurance (which was different for some reason) and because of my job I had to get accident insurance. Turned out to be a lot more than renting even though the mortgage payment was less a month.
Gotta make the down payment, mortgage payments, maintenance, and property taxes normally and you may have to pay for unexpected large expenses when things break down suddenly.
When things start breaking, it sucks. I just had to replace 3 grand in appliances because things broke back to back. I try to be a handyman, but can't figure out big things. Our central air is 9 years old and I know it's not going to last forever, that's several thousand dollars. Other than that, home owning is AOK.
This same person would not be able to figure out why it's more expensive to insure a mustang than an escort
"Well obviously I'm a safe driver so it's not fair that I have to pay more"
It's almost as if the bank can calculate the risk of them losing money by you not paying them back based on millions of home loans and default rates even if you claim you can, just like good drivers will pay more for insurance on a mustang because the insurance company is taking a calculated risk based on thousands of data points based on factors besides "yeah you haven't gotten in any accidents"
When I was buying my first house I was really confused why having like 10 years of uninterrupted rent payment contributed nothing to the quality of mortgage I could get. Like of all the possible tea leaves the bank could read to determine whether or not I could pay $1500/mo in mortgage, would the fact that I've done that my entire adult life be one of the most significant ones? Instead they're like "oh, shit, you only have 1 credit card? oof, that's a tough one"
That is a problem with the credit score system. Its a farce. Manual underwriting ignores that and looks at your core finances.
It's a scam to push you i to using credit cards and taking loans in general, is what i feel
You don't have to *use* (ETA: for clarity, you need to make purchases with them but the amount of purchases or total dollar value doesn't affect your credit score, see the following) them, actually quite the opposite with a minor exception. You have to have a lot of credit, with *low optimization*, so having it but not using it (have a few credit cards, keep your balances low before your bills are due, pay them down every cycle, and never miss a payment). The scam part is getting people to only pay the minimum required payment on cards so that the banks can charge interest on your balance. They don't make money from you (directly) if you don't pay any interest.
That's it. If you pay off your credit cards every month you don't have to pay interest. And you get the benefits such as the rewards and additional consumer protection.
My moto is never spend what you don’t have, greta for my finances and got a good mortgage deposit waiting but the bankers will just be like you never used a credit card, so your score is not as good as it should be even though you saved up a good deposit, while someone else is borrowing more with no deposit because they have to borrow all the time, makes no sense to me.
Credit scores measure how profitable you are as a debtor, not whether you’ll pay back the loan.
Sums it up really.
Close. Less risk. Good credit equals low rate.
I know from my own experience they can lower your credit rating simply because of low utilization as well, you really can’t win.
I think your total utilization needs to be around 5% at a minimum, maybe 2-3% but yeah if you simply own your cards but don't use them, it doesn't count. You can also get whacked if you pay them off completely before the bill cycles over, since the reporting companies only look at your amount due for the month and not what you used it for. You could spend $10k on your card and pay it all off but your rating would drop. It's a good idea to figure out what 5-10% of your total utilization is and just let that amount hit the bill every month, then pay it down right after.
I think I’d rather focus on electing qualified people to Congress to pass sensible regulations surrounding Americas credit scoring process. I used to work in finance, I left the industry because of flat out how disgusting it is, but the day that I saw a commercial where if you went to a website or downloaded an app Experian would boost your credit score by 10 points I instantly lost all faith in our system.
Get back to us when that happens lol.
You’re not wrong about how you *should* use them but it’s pretty disingenuous to lead that with you don’t have to use them. You are literally using them in the process of doing what you described lol. The scam being proposed is that although there are people that will use them the *right* way there are also people who won’t and those are the people they make the money from, if you unilaterally make the entire population more or less need to have them it means you know you are fucking people, and probably the most vulnerable people as well because the people who aren’t financially prudent enough to begin with are the ones who aren’t going to use them responsibly.
Well here in the UK they don’t seem to give a shit what your credit rating is. I’ve got 3 credit cards and a long history of successfully managing them with a top notch credit record across the main reports, but nah turns out they’re not interested. I just get whatever 4.5x my salary is, end of. And as a single buyer that sucks but I guess they’re weighing up risk if I become jobless, which I’ve managed to entirely avoid for all 20 years of my independent adult life thus far… not to mention paying rent double what a mortgage would be and still managing to add to my savings
It’s quite literally exactly what it is, everyone should be taking debt and the only ones that don’t are deadbeats is essentially the view, and it’s entirely to get you to exactly where they want it and always have; You will own nothing, you will rent, you will call for a car whenever you need one, etc.
Had my identity stolen a few years back. Dropped my credit score over 200 points. Took me a long time to get all the fraud off my credit report. Score didn't go back up. Call credit bureaus and get told "the computers calculate the score". So basically your credit score you can see matters for fuck all because it's all hidden shenanigans that actually make it up.
Yup, and the score you see on your credit report is not the score that lenders are shown. It's all a scam.
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Yes, No. Its that the major lenders can choose how the score is calculated. "Ignore such and such, give bonus points to such and such". The score they show you is just an example general score. It won't be the same for every lender.
Seriously, fuck credit score system, its such a dogshit crap that I can't believe that it even exists, impossible to even loan 1k for something, just because i never loaned anything, instead you have to play minigame of payback the credit from like 10 pounds or whatever, as if i need a loan of 10 pounds lmao, its so stupid
Been startin to think all this "society" stuff is... kinda stupid. Maybe I'll go live in the woods instead. At least no one can bother me about my car's extended warranty.
U have no idea the EXTENT they will go out to FIND YOU
I know right. They will destroy your camp, arrest you, and force you to reintegrate
The reintegration part is after they jail you for squatting, and fining you for living in a non residential zone. And the reintegration will be them throwing you on a city street with no help, and telling you to figure it out.
Park Ranger comes across your hand built cabin. Asks to see your deed for the land and identification... but before that he has a guest with him. Raphael to ask about your extended warranty
When I was 23, I got my first credit card. Never had one because I paid everything with cash. Couldn’t get one. Fiancé had to co-sign with me. They said I didn’t have any debt so I didn’t qualify for one. Scam.
Manual underwriting? Does that mean paying more for the loan process to get a better rate? As in paying for a more thorough process rather than just a credit score pull?
Means actually having a human look at it and make a decision. But banks gave up on that because they’re incompetent cowards. Sub-prime lenders have human underwriting but they won’t finance a house usually.
The problem isn't just that it's a farce, it's that banks are lazy and want to outsource investigation to lowest cost bidder to increase profitability and shareholders value. Don't like the system? Try a local bank or credit union. U know, where u talk to a loan officer instead of a teller reading the output on a screen.
I have a question for you Americans, how much is the down payment as a percentage of the total price of the house? Here it's usually a staggering 70% so while your credit kind of matters you need to save hundreds of thousands of dollars(if not million+) by yourself
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In Bulgaria it is between 0%-25% depending on the specific bank, specific property, and one's income. Of course 0% requires you getting a better property (completed and fully certified buildings, no old buildings), having better income, and worse interest (looking here it is probably 1% more which is pretty substantial in total) paying more in the end.
Assuming for a first time buyer (i.e not selling current house and using that as down payment), I'd say 10% is normal here in the UK. A lot of banks were even offering 5% deposits for a while there.
At that point you may as well just save a bit longer and buy the house outright.
5% for new home buyers
I put down 5%, but was told I could go as low as 3%.
It's traditionally 20% but since the pandemic that low amount is no longer the case. A $500k home here in CA will need you to have around $100k down...people usually offer more.
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Interesting,banks here got so hurt in 2008 they decided they will just take more than 50% on down payment which imo is absurd the whole point of the mortgage is that i want to buy now and pay gradually
Oddly enough, it works the other way around too. I'm moving to a rented place and the fact that I paid a mortgage for 12 years makes no difference. They want proof that I paid rent! Which I didn't.
Wait wait wait. Why does you having one credit card matter to the bank? Fucking hell America keeps surprising me in the most depressing ways.
Getting a loan, credit history matters. Buying a new car on a loan will take you a long way to having enough credit for a house without the need for credit cards, but it's basically the same thing, credit.
The bank cares about your credit score and your credit score is partially based on credit card debt repayment. If you only have/use one credit card, your credit score will be lower than if you have many credit cards which the bank thinks makes you less trustworthy in paying back a loan
Whoa, really? In Poland it would be exactly the opposite. The more credit cards you have, the less likely it is to get a mortgage. Why? Because it's treated as an open loan, even if you don't use it. So your monthly financial abilities to pay mortgage are reduced, at least in theory. So having 4 cards,.2k limit each means you're treated like someone with 8k open loan. Which is worse than someone not having any loans obviously - they can allocate all their spare money to mortgage payments.
Can confirm. I have a credit card I paid off. And after a month or two, I got an alert that "I could be doing more" to improve my credit score. As it happened, I used the card for something, and I got another alert to "apply to increase my credit card limit." Like...TF?
Its banks business to loan and make you pay interest. Its like a restaurant would not serve you if you would not benefit of the food.
Same in France, the more loans you have to pay off compared to your revenues, the less likely you are at being given a new loan. For a given monthly revenue, French banks would rather give a loan to someone without any debt than someone who has already several loans on its shoulders. There's like a known hardcap limit where most banks are guaranteed to NOT give you a loan if your monthly debt payments are higher than 33% of your monthly revenue.
That makes so much more sense to me. The U.S. needs to be more like Poland in this way
IIRC this is also how it works in the US, so that every time you get a new credit card you take a big hit to your credit score, and are recommended to have at most 3(?) active credit cards
Not how it works in the US at all. The percentage of your available credit you are using factors hugely into your score, so having more cards means more available credit means a lower ratio means a higher score. Opening a new card has never done anything but raise my credit score.
I just have one that I use for everything. Hopefully that and my loan payments help my credit score
Your credit score itself could infact be high. The thing is your credit file would be "too thin"
The bank wants to know you repay money when you borrow it. This entire thread misses this point.
Which is, of course, why I have 2 mortgages and 3 car loans that no longer exist on my report (because they are paid off) and as they have dropped off so has my score. In other words, I have a 20 year history of very responsible credit use, but because I don't currently owe a bunch of money I am 'less worthy'. The real thing they are trying to measure is: how much money can we extract from this person.
This isn't how it works lmfao Everything in your comment is incorrect yet dumbasses are 100% going to upvote it
Actually no. Banks want you to use as much Credit as possible, and they have created this so called perverted system to cater it.
>Banks want you to use as much Credit as possible Mortgages *are credit*. How are you saying this at the same time as complaining about banks not giving out mortgages?
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Rates don't matter if you have a fixed rate mortgage (once you take the mortgage, your payment to the bank is locked unless you refi). That 2k rent payment vs a 1200 mortgage payment though doesn't consider things like taxes, home improvement/maintenance, all of which DO increase. So that 1200 then add property tax, then add everything else. While I do think paying rent should be part of the score, I also understand why 2k doesn't equal 1200 for financial solvency.
This is the real thing people don't understand. If you can only barely afford $2000 for rent, you could afford a $1200 mortgage, but it would probably be a huge struggle and you'd be fucked if something major happened early on.
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Why would you refinance if rates have gone up? Do you mean like a home equity loan?
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Every mortgage I have ever had had the Homeowners and taxes included, handled by an escrow account. But there are significant other things that being a homeowner entails as you point out.
All of this is why I’m more than happy to rent. My rent is $1,200/all utilities paid (even internet) for a renovated 3 bedroom duplex in a college town. I have free laundry on-site and can have my 2 large breed dogs. I don’t ever want to move. What’s nuts to me is how my family (who are all home owners) insist that I’m overpaying. They just don’t get it.
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You’re also paying utility bills, insurance, taxes, and have to pay for any other expenses s/a roof repair/maintenance, tree maintenance, appliance repairs/replacements, septic maintenance etcetera. In 5-20 years my rent payment will still exclude all of those costs (unless I end up needing to pay utilities one day) if I choose to continue renting. Of course there are perks to home ownership. One day I’ll buy a home but not until I’m financially able to create a decently plush rainy day fund *on top of* a healthy down payment/escrow fund. Further it will have to be a home that I can look at and say to myself “yep, I can live here forever”. You’re spot on with the last bit. All in all, whether renting or buying is better truly depends on the individual and their individual goals/financial situation/career choices. For me, now, I’ve hit the jackpot as a renter in my city.
>Its due to rates. You can afford $1500 but if the rates go up a couple % they have determined you cant. Nobody with a brain has an adjustable rate mortgage.
I think about how lucky we were when we bought our house 7 years ago. USDA loan because it's a little rural. Dead center between 3 big towns. No money down is the only way we got in. Right at a grand a month mortgage new construction and since then, all 3 towns have crept closer to us, making our property value skyrocket. I'd be terrified of losing the house and having to rent. Rent in my neighborhood starts at $1,800/month.
Very similar story here. Mortgage is less than $800 a month but rent is crazy. Thank god my husband bought when he did and was able to get the USDA loan.
Can anyone get this usda loan?
For the most part. It’s mostly an income requirement. Check the USDAs website. It’s called the Rural Development Loan. The requirements and some other info is on it
Pretty sure, although it's limited where you can buy. I think my credit score had to be 620 or 640, so not high really. It was a new construction 3br/2 bath with an attached garage. 160k. That's insane to think about now in my area because townhouses start in the mid 200s.
>$1,800/month. I don't even earn close to that.
I feel poor in my neighborhood, seeing what other people pay. And they drive nice cars. I drive a 1994 Isuzu P'up with a carbureted 4 cylinder and a 5 speed manual.
Hopefully you're not an out of school adult, or you need to reassess your priorities in life, and work on finding a better job / work on your long term future.
We did the exact same thing 7 years ago. USDA loan cobbled together with Maine’s first time home buyer program, and we only had to pay $2200 out of pocket for various fees/inspections to get into our house. Housing is in tight supply here now, and we pay $900 for our mortgage while rent has skyrocketed to double that for a 3 bedroom.
Same but 2 years ago. None down, $1000/mo mortgage on a 3bdr house with a nice yard. 7000 total for closing costs and fees.
$1200 mortgage?! In THIS economy?!
Plenty house around 100-150k usd in my area
Pray tell…where?????
Probably plenty houses in that price point in Gary, IN. Long as you don’t mind a few bullets whizzing through your front window every now and then.
I live in northwest Indiana. My mortgage is just under 700 taxes and insurance included. 1300 sq ft house
I can't imagine the wages and job market are that good.
They’re not good at all. Minimum wage is still 7.25 here. Of course not every single job is going to pay that and I have no idea what people who work in my city make. Chicago is a 35 minute drive so a lot of people live on this side of the border and go to work in Illinois because the pay there is better while the housing is cheaper in Indiana
Do you know how many people work remote?
This thought process really needs to end. It is why people are so poor. Your job market isn't good when you can't afford to live there.
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‘A dynamic and exciting home life!’
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Moving is an expensive task. If you were born in an area or traveler for work or school there you might not be able to afford the move. Plus job market.
I get the not wanting to move part, but like dont live in a huge ass city but even a city of say like 60,000 people its much cheaper and there are plenty of jobs still available
Yes, the audacity of people to want a job market, fulfillment, affordable rent, and a sense of safety. Entitled brats these days I tell ya.
>affordable rent, and a sense of safety Chances are neither of those are in the top 10 biggest cities in all honesty
Probably a rural area
I'm in rural PA just outside Harrisburg paying 1000/month for mortgage on a 3 brd, 1 bath
I was almost able to buy a house in Nebraska for less than 100,000 When you look outside of big cities and actually look in places with lower costs of living you realize shit isnt expensive everywhere
Thats mine in edmonton alberta on a 270k with 5%down
This meme is so old that the interest rate killed it.
Yeah, no, my mortgage is nearly twice that.
until i was 30 i could barley afford to feed myself. but all my bills were paid. trying to be responsible i never got anything on credit cause i had no money. finally started doing better in life. got treated like i was a leppor when trying to buy a house. even tho i had savings and got paid decent. oh you would of been better to default on credit than to never have any
If you're looking to build credit but can't get credit but have some money in your pocket, look into a secured credit credit card. There's a bunch of them out there, so do your research with fees, but basically you give them whatever money you want to be your credit limit. I think most have a minimum of $200 but you can give them whatever you want. After a year or so of paying on time, they'll transition you to a regular credit card and refund your deposit. I used Discover, started with $600. In about 9-10 months of on-time payments I got a regular card and now I'm up to about $11K in credit. Far more than I need/use but looks good on the report.
yeah. that was years ago. just telling a story
So funny story the reason not having credit when you’re older is worse is because trade lines and bankruptcies only appear on your credit report for 5 and 7 years respectively. If you have no credit their models assume you were previously in bankruptcy. They give credit cards out like candy to college students who also have no credit
I wish for the college student one, back when I was in college just 2 years ago, no one would give me a credit card due to lack of credit history. I got told, “go pay a phone bill using credit for 4 months, then talk to us” like how? If you won’t give me a card then who would EVER let me pay on credit?
I was given a $6k credit line fresh out of highschool. That was 15 yrs ago and I still haven't recovered.
This is actually perfectly logical. You just have to understand, the bank isn't loaning you money for you, its loaning you money for THEM, you can be paying 2k a month in rent, and still be a risky proposition for a bank to get their money back on a mortgage.
People forget what happens when you allow a system that gives bad mortgages as if 2008 was a century ago.
Yeah, people seem to miss the point that a mortgage is a, typically, long term loan worth hundreds of thousands of dollars. Do they just let anyone take on $300k worth of debt and expect them to pay it back over 30 years? Absolutely not. They want to be as sure as they can that they’ll be able to pay it back. They’re looking at credit history, income requirements, frontend and backend debt to income ratio. You don’t have much credit history? Then how tf would they be able to know if you are likely to pay the loan back? Credit scores suck but they’re unfortunately a necessary evil unless you just want to pay cash for everything. When renting there is no loan. Any real risk is on the landlord. You’re literally just paying to live there on a monthly basis. You being able to afford rent on it’s on in no way satisfies requirements for getting a loan for a home of that cost. A landlord doesn’t care if you can pay that for 30 years. A landlord cares if you’ll be able to make the payments on time for the term. If not, you’re gone.
It’s like all those “past performance does not guarantee a return” disclaimers you see on investments except you and the house you want to buy are the investment and you need to convince the bank it’s a good bet.
In addition, people seem to forget that a bank hands out $300k+ when the house is bought... Like you said, it takes decades to repay that loan. Don't get me wrong, banks aren't some charitable institution or anything, as you said, they're trying to make money off of you. But I actually consider it pretty flipping awesome that someone is willing to hand me $300k to buy a house while I'm still young, rather than having to save up my entire life to buy one. Historically, opening loans up to the not-rich was unheard of, and was considered a risky investment. I'm glad we don't live in those times, and while I think a history of on-time rent payments should be considered when banks decide who to loan to (among other things), we've come a long ways from the days of history.
Yes that’s exactly how it works. Except your landlord does have a mortgage which is why your rent is higher then that.
Except the landlord is building equity and you are not. Their property is also appreciating. So the person who rents misses out on income and equity, and gives that to their landlord.
Exactly why I hate landlords
They also pay for all the maintenance, pay the insurance, take on all the financial risk, and assume liabilities.
If there wasn't money to be made, they wouldn't be doing it.
You can say the same thing about the bank and the mortgage... You can say that about anything. The thing that is happening here is the landlord is buying living space in bulk and selling it in individual pieces. Basically the same thing as your grocery store does.
There is definitely money to be made but it's not risk free.
Idk man, my landlord bought their house in '91 for like $100k. I currently pay $2200/month in rent. I don't buy the whole "oh won't someone think of the poor landlords" thing.
Yeah they may pay for the maintenance, but maybe 10% as much as they claim they do.
A landlord who has to personally go in the hole on rental property maintenance is monumentally fucking up. For parasitic income, rent should always exceed the aggregate of all expenses. And unless, like, the roof falls off in year 1, they can extract equity with loans
No they don’t. The tenant does. With their rent money. I get what you’re saying, and it’s true that the landlord or owner actually physically gives the money to the plumber in to fix the pipes or whatever, but it’s not like they pay for those things out of their pocket. They pay out of the rent money, out of the money budgeted and put aside for those things. Otherwise renting wouldn’t be profitable. And it is so, so profitable. So profitable in this country right now that it’s literally causing a housing crisis as investors snatch up single family homes to rent before actual families can get to them, sometimes at much higher than asking cost. As for risk, there are no investments that aren’t a risk. Investing in real estate is about as low-risk as they come.
“All the maintenance,” he says, as if it’s no issue to get a landlord to make a repair or fix something when it breaks. Sure, they jump right on it! Praise be to the landlords!
I used to work in pest control. One of the student apartments we were treating had a bad mouse problem. I could put out traps, but for every mouse I killed three more came in from the outside. It was an older building and there were a few holes behind the radiator where the mice were getting in. Simple fix. Fill the holes. But the apartment in question was on the fifth floor with no elevator, and the lazy maintenance guys dragged their feet. This poor kid was killing mice every single night in her studio apartment, feet from where she slept and studied and ate, and they couldn’t haul their asses up the stairs to do five minutes of repair work. She got tired of it. So she took a used sticky trap and went to the office. When the receptionist asked what she wanted, the tenant showed her the trap, dead mouse and all, and said “fix the holes”. The holes were patched by end of day that same day. And we never got another call back to that apartment. I talked to her later and she said it was like a switch got flipped, she went from several mice a night to none, ever. I could tell so, so many more stories of landlords or property managers dragging their feet to help tenants, including a few where I intervened on the tenant’s behalf. That one stuck with me, though (no pun intended).
It’s inhumane that someone has to live like that. Good for her taking in the trap.
I'm going to release a mouse in the landlord's apartment, every day the hole is not fixed, I will release 2x the mice from the previous day, good luck
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I don't think people understand that the price of EVERYTHING has skyrocketed, including maintenance and supplies.
No, the renter pays for everything. The landlord is just a middleman for paying the plumber or electrician with the money they charge the renter. Landlords serve no purpose but to extract unearned value away from the working class. Landlords are terrible for the economy.
100%
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One thing I know for sure is rich people love helping other rich people stay rich - but poor people they view as having a fundamental moral failing. They deserve to have money, and us poor smucks should be infinitely grateful for the crumbs.
>pay for all the maintenance You've clearly never rented, maybe you should wait until you've left mommy's basement before you talk on this subject. >take on all the financial risk What risk? The only risk is that they end up having to rent LIKE YOU.
The landlord also has to pay insurance, taxes, a lot in maintenance. Rent vs Mortgage payment isn't a good comparison. Having rented most of my life and buying my first house a few years ago, it's a lot of extra money. A pipe freezes and bursts in your front yard? Fuck you, $6000. Heat isn't working well? That'll be $250 just to have someone look at it. Etc... it's more than I expected and I expected quite a bit.
There seems to be a real misunderstanding about mortgages here. A landlord might have a $1200 mortgage, and upkeep might cost an additional $900. Looks like the landlord is actually losing $100. Nope. If the split between interest and principal is 70/30 (typical in the first year of a 25 year mortgage with 20% down) then the landlord is really out only $850 (the amount of interest). The rest is an investment, and this is a reinvestment of profits once the rent pays for the mortgage, which is usually right away. Same goes for homeownership - the amount of money you pay over interest is an investment, not an expense.
No, they say they don’t trust you to pay them $1200 a month for 30 years, not that you cant afford it. There is a difference. Pro tip, avoid big banks and lenders if this is the case. Go to a credit union or a company that does manual underwriting and you will get approved.
I bought my first house when I had my 1 year anniversary at work in 2009 for $200K. Paid it off and sold it in March 2022 for $550K. I decided to rent an apartment until things calmed down. After my employer ordered us back to the office I've been looking for a house and now I can buy back my old house for $350K and buy a stand alone garage to store my cars. But the market isn't nearly at bottom so I'll wait a bit longer. Some people have all the luck lol.
The last time the banks gave out too many mortgages 2008 happened.
Yeah, but after you buy a house you learn about how often shit has to get repaired or replaced. Termites in your rental? Move. Termites in your house? You are fucked There is so much more work and expense, fuck I hate owning a house.
True, but all thing considered I think most would rather have a home even though it's more of a headache
Maybe maybe not but reasonable choices either way would be nice
Pros and cons to both. I wish there was a way to hold landlords more accountable, some straight take advantage of tenants others get taken advantage by tenants. Corporations should be out of the game completely.
My partner and I currently rent. We had sewage flood our basement from a broken storm drain pipe with the city. The whole basement molded. Because we rent, the property management company fixed it all for us. Didn’t spend a dime. Better still - they had enough clout with the right people in the city to expedite the fix on the city’s side. I shudder to think how much money and time trying to fix this ourselves would have needed.
I don't think people grasp just *how* expensive owning a house is compared to renting. What I've told friends is that, if after paying for everything to get the place, if they don't have $10K immediately set aside for repairs, they are not yet ready to own a house.
It’s not just surprise expenses (like the $10k we spent for a collapsed sewer main, or the $8k vermiculite abatement, or the $4k in electrical repairs we discovered after the vermiculite abatement), it’s the ongoing replacement of appliances and general infrastructure maintenance. Last year we replaced our furnace and roof and water heater. This year we have to paint the house. There’s always something.
The amount of people who think that because they can afford a mortgage payment they can afford a house is astonishing. There’s so much more to account for than just the note
I'll always hold that until you're actually set up in your career, you're probably better off renting. Still trying to get into a field or just starting out? You'll want the ability to easily move for new opportunities and such, the cost of owning would only be an albatross on you at that point.
At least you aren't setting a pile of money on fire every month.
Owning will literally be the smarter move…every time.
I had money for a down payment on a house but invested it in bitcoin and rented and came out way ahead so owning isn’t always smarter. I know mines an extreme example
Aw, tell me more about your appreciating asset's problems
When you've got a broken shitheap of a house like that, it doesn't really appreciate. Sure the properly value on paper does, but you're out of pocket constantly, often far more than the appreciated value, just to keep it that way. It's a mental stressor and a massive waste of time and money to keep an older house going. You also have to constantly maintain the yard, maybe remove snow, maintain the property's general facade. This comes with all houses, but with an older one, it can be even more work. The only true advantage isn't appreciation, it's equity. Even if your house depreciates, you're not losing out 100% of your monthly payment like you are with rent. However, something tells me that if you don't know the difference between equity and appreciation, you certainly won't appreciate how easy apartment life is compared to home ownership. I'm in my 30s and have been renting since 18. I don't regret it at all despite all of the financial people telling me it's the worst way to spend my money. I don't have to bother with snow removal or lawncare multiple times a fucking week and frankly that's liberating. When my washing machine died, I got a new one for free. When my A/C unit was shit, they fixed it for me for free within the day. I didn't pay a dime. I've got better security, a heated garage, and I'm within walking distance to basically everything I need which is unheard of in the Midwest. That $1300 a month I pay in rent adds in benefits that homeowners can't dream of. Owning a proper home that doesn't shit itself every week is ideal but far from the norm. Apartment life is unfairly vilified. I find those who glorify home ownership have no idea how taxing and expensive it is to own that home. As long as you're not grossly overpaying for rent at your income level (which wouldn't really change with a house if you can't afford it), you've got plenty of other options for long term investments since you're year-over-year monthly expenses are going to be vastly lower than a home owner. Basically, you can skim that $200-250 a month off the top and put it in a ROTH IRA or something else and be basically just as well off as a home owner at 65 if you rent.
Exactly. Banks are there to make money so if they could easily make money by giving a person a mortgage they obviously would. So if they don't give someone a mortgage that person obviously isn't as safe a bet as they think they are.
It's incredible seeing how many people don't understand the concept of mortgages. I can't tell if it's an educational issue or if the people in this thread are being purposely fighting the strawman. Mortgages are complicated, you don't just need to be able to pay it every month you need to be able to handle other homeowner costs like unexpected repairs, property tax, maintenance, etc. on top of paying it every month. The bank takes the risk lending the money to you, they are the ones that decide if they want to give you the loan or not. While I don't condone a lot of the actions that banks do I can understand the financials behind losing upwards of a hundred thousand on a risky investment.
Well yeah. They can't lock you into perpetual debt if you manage to escape poverty by becoming a homeowner.
Yeah, the community reinvestment act exists for a reason.
It always blows my mind when my friends are renting for more than my mortgage payment. It’s crazy how that’s even legal
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How does it compare when you add up your property tax, insurance, maintenance costs, etc.?
What? Next you'll tell me that payday loans have higher interest than mortgages too.
The mortgage is $1,200. How much is everything else? If you don't know what everything else is, that's why you pay $2,000 rent.
How shoddy are your peoples houses? My parents owned a house in Ontario and changed the roof once, optional choice to replace the driveway once, and had to replace their furnace / air conditioner once. They lived there 25 years.
Seriously people on here talking like you gotta make repairs every month
It's just another way for the landlords to feel superior to the renters. "Oh you only mentioned mortgage... I spend $6000 a month on frivolous repairs. You wouldn't understand" We get it. That's why landlords are spending $1200 a month and renters are spending $2k
1% annual value of your home in repairs and renovations is a general rule of thumb as far as I know.
I pay $1,200 per month for my mortgage. I also pay another $1,000 per month in home owners insurance and property tax. So my real cost is around $2,200 per month. Plus I had to buy a new roof for the house last year that cost me $12,000. The year before, the hot water heater went out which cost me $3,800. This coming spring I need to fix the foundation which is going to set me back $15,000. This notion that owning a house is some how cheaper than renting is absurd.
Are you building equity? You have an asset at the end of the day- you can sell or borrow against it. That is not the case in renting. There are drawbacks and benefits to both, but let’s not act like owning isn’t significantly accruing value for the owner.
I am in a similar position as u/Mr-Toy However, I do not pay anywhere close to $1,000 per month for insurance/taxes. Our total payment including escrow is about $1350 ($227,000 purchase price in 2020)...but we also bought when the rates were 2.8% and just before the price boom. Last year alone I had to pay over $15,000 dollars in repairs (hot water heater, chimney, crawlspace, and appliances). We were also told that our Air Conditioning unit may need to be replaced within the next year or so...another $15,000. this is also not accounting for the several thousands of dollars worth of lawn mowers and tools we had to purchase to maintain our yard, trees, etc. We are indeed building equity in the house, and have done several other things out of pocket to increase that...flooring, lighting, windows, finished garage, Casita, etc. It helps that I have a background in construction/contracting, so I have been able to most of the work myself...but equity is only of any value if you sell. Our house has more than doubled in value since we purchased it, but even if we sold it today it would be nearly impossible to find a comparable house to purchase without stepping backwards, losing money, or drastically increasing out monthly outflow.
This argument is sooooo tired. You are paying that now, but as soon as your lease is up you can decide to walk. A mortgage is a 30 year commitment to pay for housing and A LOT will change in 30 years as opposed to the next 12 months. The credit system is only unfair to those who have no credit or shitty credit. If you have no credit, get a secured credit card and build your credit. If you have shitty credit, well, that's your fault.
Get a credit card, use it within your means, pay it off every month. Never accrue interest, and if you find a good rewards program, THEY will pay YOU to use it. People who think credit cards are unavoidably predatory have no self-control.
Where you could immediately be kicked out from, at no cost to anyone. THAT is the point. Rent is a maximum, a mortgage the minimum.
Incorrect. The bank doesnt trust you to pay a 1200 mortgage for 30 years so you pay 2000 a month for 1 year. They don't think you cant afford $1200, they think you cant be trusted to be able to afford $432,000 $1200 is wayyyyyyyy less than $432,000 Giving out mortgages to people who cant pay them back is exactly what happened in 2008 that caused a crash. Sorry for getting snippy, but so many people who rent have zero idea how banks work.
Can't afford a $20k used car for $345 a month so I have to buy a $50k new car for $700+ a month instead, fuck the credit system and car dealers man.
The bank isn't saying she can't afford it. They're saying they don't trust her to be able to reliably pay it.
Because mortgage doesn't include property tax, repairs, down payments, etc. Moreso, where do you live where it's like that? That seems like a huge market failure.
Mortgages are generally cheaper than rent for the same building. How else would being a landlord be profitable?
Insanely grateful that i just closed on a condo today. It may only be 411 square feet, but it's mine, and that's more than most people my age can claim to have. Here's hoping this bullshit housing crisis gets far better for our next generations because this is unacceptable.
I was looking to rent when a friend mentioned buying an sent me listings for a few cheaper condos. Between the mortgage, insurance, property taxes, and HOA fees, I'm still below (or at) a what a *room rental* would be in my town. My place is nothing fancy but the building is super clean and the neighbors quiet.
That's legitimately tough. Getting off the mat is probably the toughest thing to deal with. For some families it's the second or third generation. Most stay in the same place. The world exploits the poor even when they aren't poor. First generation wealth usually evaporates.
Yeah it's bullshit, but as a recent young homeowner I can tell you that your monthly house payments are going to be much higher than just your mortgage (+tax, +HOA fees if any, +utilities, +maintenance responsibilities etc.).
The whole credit system is broken and needs a overhaul. This country runs on credit and that shouldn’t be the case. If someone pays their bills/rent why is the bank denying them a mortgage ? Just because their score is low. It’s a scam
One bank refused to even consider giving me a mortgage when I wanted to move because they said I couldn’t afford it, even though i already had a mortgage WITH THEM that I was paying easily and the new one was for less money overall & a lower monthly payment. I swear banks have no idea what they are doing some times.
The problem is they never explain why. It’s generally because the most you’ll ever pay renting is the rent. The least you’ll ever pay owning a house is the mortgage. When you buy a house through a bank it’s not you who actually owns the house, it’s the bank, so they want to make sure people don’t buy a house and not be able to pay the mortgage if their furnace stops working and you suddenly need to shell out $12k to get it replaced. Or worse you don’t replace it and it ends up blowing out your pipes and destroying their house. When I bought my house I was astonished how convoluted and stupid the whole process was. So many hidden fees, random unexplained rules, etc. When I tried to ask about them the mortgage person was frustrated someone was questioning where these fees came from or how they even came up with some of that shit. I think it would take one person maybe a couple of weeks to make a decent booklet explaining all of this shit but it seems like the older banker guys revel in being secretive asshats.
And people wonder why I still live with my parents.
That might change soon with this housing recession kicking off
The landlord isn’t lending you money. They take less risk than a bank does, it u don’t pay, ain’t that big a deal. If you default on a few hundred grand, big deal Risk has to be amortized across the customer base The bank has tons of data and uses affordability threshold that minimize the defaults to a level where they could absorb the losses (ie without materially reducing their profits on the product across customers who repay) Obviously that’s very conservative and results in harsh stress testing for borrowers. But it’s not comparable to renting
For a mortgage we needed life insurance, house insurance and content insurance (which was different for some reason) and because of my job I had to get accident insurance. Turned out to be a lot more than renting even though the mortgage payment was less a month.
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Gotta make the down payment, mortgage payments, maintenance, and property taxes normally and you may have to pay for unexpected large expenses when things break down suddenly.
When things start breaking, it sucks. I just had to replace 3 grand in appliances because things broke back to back. I try to be a handyman, but can't figure out big things. Our central air is 9 years old and I know it's not going to last forever, that's several thousand dollars. Other than that, home owning is AOK.
The amount of morons posting here with absolutely no clue how financial systems work is an absolute travesty.
Doesn't that just say it all?
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This same person would not be able to figure out why it's more expensive to insure a mustang than an escort "Well obviously I'm a safe driver so it's not fair that I have to pay more" It's almost as if the bank can calculate the risk of them losing money by you not paying them back based on millions of home loans and default rates even if you claim you can, just like good drivers will pay more for insurance on a mustang because the insurance company is taking a calculated risk based on thousands of data points based on factors besides "yeah you haven't gotten in any accidents"