Shouldn’t a career real estate developer understand the basics of mortgages well enough to spot the flaws in this plan, even if the incompetent advisor doesn’t?
"Pulte Pride" my ass. His name is on billboards all over my state promoting housing development after housing development after fucking housing development. I knew his name sounded familiar.
And no one in the press is asking WHY things have to be vetted before going to Dear Leader? I mean. He is the president. Should he not be able to vet ideas himself?
What's the difference between a 50 year mortgage and just renting?
Oh, let's see, and they're all negative. Like, for example, if you need to do any repairs. If you're renting, you call the landlord and say "water heater is broken, have your plumber replace it." If you "own" the house, you're arranging for the replacement. And it's worse: need a new roof?
The 50 year loan (and its automobile equivalent at 7 or 8 years) is for the innumerate only.
Yes without a lower interest rate a 50 year mortgage makes no sense, but then without a lower rate a 30 year makes no sense over a 15. If you are getting a mortgage and can't pay it off in 15 years, you are borrowing too much and should get a cheaper house.
The problem with your analysis is it assumes that a 50 year mortgage means you take 50 years to pay it off. You can get a 50 year mortgage with a lower interest rate and then pay it off faster. The median time of home ownership in the US is about 15 years which means you pay it off after 15 years when you sell. Your analysis should include that scenario.
There are no such things as cheaper houses. At least not here in the Netherlands, when you look at modal income and average house value, then you would need to earn a bit more than 1.75 times modal to afford the average house.
When looking up some more income bracket details, this means about 10% of Dutch people can afford the top half of Dutch houses, so 90% of the Dutch people must compete for 50% of the cheaper houses.
If all houses were now emptied and everyone had to bid on them, then 40% of people would end up homeless while 40% of homes will remain empty.
(Not exactly since this ignores people living together, but it still isn't a good thing).
dunno if it should. Shaving 10 years off a 50 year is not going to do much for you, where as saving 10 years off a 30 year would. 30 year is still better.
It's been a long time since I had a mortgage, but as I recall, there were a lot of limitations on paying it off faster. Like we could only pay so much extra, and only once a year, and a few other things I can't really remember.
I recently paid off my 15-year mortgage early -- did it in 10 years. I don't know when you had your mortgage, but for both my current house and previous house (25 years ago), there were no such restrictions on the loan.
I know that subprime loans had all sorts of anti-consumer conditions (like the inability to pay it off early), but for a standard mortgage through a reputable lender? Nawww.
One thing that might actually HELP homeowners is outlaw the hideous front-loading of all the interest payments. Make every payment, from the first on down, an equal proportion of interest payments and principal payments.
Of course, the banks would hate this, so it's not happening anytime soon.
(FYI, on a typical 30 year mortgage, for the first five years you're paying about 95% interest, and about 5% building equity. For the last five years, those numbers are reversed. Yes, it's a nasty dirty little trick. Let's update Shakespeare a little: "Second, we kill all the bankers.")
There's spreadsheets out there that'll do it for you - if you pay for them. There might even be freebie versions on the Internet somewhere; although perhaps without the little sliders that say "Fuck the customer <---> Fuck them a little less hard".
Another interesting detail is that in foreclosure the banks are supposed to rebate you your equity from the profit of the sale of the foreclosed house. And if you don't have any equity - since all you paid was interest - ha ha, sorry pal.
(Not that they did, because they're also allowed to deduct fees and fines and charges and wtf they felt like from whatever they were supposed to reimburse you anyhow. Car repo bankers do the same financial shenanigans. Not to mention fake sales for peanuts plus kickbacks... All perfectly legal - guess who wrote the laws?).
Perhaps someone who works with a real estate (or better, mortgage broker) who has access to an office license for this sort of thing can chime in (at serious risk to their job, though. Those in charge do NOT want people talking about this).
"If you work really hard and save every penny, we might consider you for a lifetime of serfdom." PAY YOUR RENT OR INTO THE GUTTER YOU GO!
Shouldn’t a career real estate developer understand the basics of mortgages well enough to spot the flaws in this plan, even if the incompetent advisor doesn’t?
This is what a game of Telephone must be like ... in Hell.
"Pulte Pride" my ass. His name is on billboards all over my state promoting housing development after housing development after fucking housing development. I knew his name sounded familiar.
When The Pope plays Monopoly, does he like to be the little dog?
Fuck Ted Cruz.
If it's just the monthly payment Trump is worried about, why not 100yr mortgages?
My Dog, he's such an idiot.
Fuck Ted Cruz.
"If two pills a day will make you well, then ten a day will make you even wellerer."
Historic Great American Bigly Yuge President Brain Giant donald trump (allegedly)
More like indentured servitude than a mortgage.
I wonder how many years it takes to pay off the transaction costs so that you can start acquiring positive equity. 15 maybe?
This is why my house is not for sale, although I would really like to move out of red hell.
What are the odds of me not only surviving but being employed all the way to age 104?
And no one in the press is asking WHY things have to be vetted before going to Dear Leader? I mean. He is the president. Should he not be able to vet ideas himself?
Let's compare to the Netherlands.
In the USA a $415 200 30 year mortgage gets you monthly payments of $2 288 which comes to a total of $823 680 paid, of which $408 408 is extra.
In NL a €415 200 30 year mortgage gets you monthly payments of €1 961 which comes to a total of €705 960 paid, of which €290 760 is extra.
Honestly? Not as big a gap as I expected.
Of course in both cases there are not enough homes for 415 200 or less available.
What's the difference between a 50 year mortgage and just renting?
Oh, let's see, and they're all negative. Like, for example, if you need to do any repairs. If you're renting, you call the landlord and say "water heater is broken, have your plumber replace it." If you "own" the house, you're arranging for the replacement. And it's worse: need a new roof?
The 50 year loan (and its automobile equivalent at 7 or 8 years) is for the innumerate only.
I almost coughed up a lung laughing at “Tiger Beat on the Potomac.”
Courtesy of Charlie Pierce over at Esquire.
ETA: Friend of the blog.
Yes without a lower interest rate a 50 year mortgage makes no sense, but then without a lower rate a 30 year makes no sense over a 15. If you are getting a mortgage and can't pay it off in 15 years, you are borrowing too much and should get a cheaper house.
The problem with your analysis is it assumes that a 50 year mortgage means you take 50 years to pay it off. You can get a 50 year mortgage with a lower interest rate and then pay it off faster. The median time of home ownership in the US is about 15 years which means you pay it off after 15 years when you sell. Your analysis should include that scenario.
There are no such things as cheaper houses. At least not here in the Netherlands, when you look at modal income and average house value, then you would need to earn a bit more than 1.75 times modal to afford the average house.
When looking up some more income bracket details, this means about 10% of Dutch people can afford the top half of Dutch houses, so 90% of the Dutch people must compete for 50% of the cheaper houses.
If all houses were now emptied and everyone had to bid on them, then 40% of people would end up homeless while 40% of homes will remain empty.
(Not exactly since this ignores people living together, but it still isn't a good thing).
dunno if it should. Shaving 10 years off a 50 year is not going to do much for you, where as saving 10 years off a 30 year would. 30 year is still better.
It's been a long time since I had a mortgage, but as I recall, there were a lot of limitations on paying it off faster. Like we could only pay so much extra, and only once a year, and a few other things I can't really remember.
I recently paid off my 15-year mortgage early -- did it in 10 years. I don't know when you had your mortgage, but for both my current house and previous house (25 years ago), there were no such restrictions on the loan.
I know that subprime loans had all sorts of anti-consumer conditions (like the inability to pay it off early), but for a standard mortgage through a reputable lender? Nawww.
They do the same thing with student loans
It's kind of horrible
One thing that might actually HELP homeowners is outlaw the hideous front-loading of all the interest payments. Make every payment, from the first on down, an equal proportion of interest payments and principal payments.
Of course, the banks would hate this, so it's not happening anytime soon.
(FYI, on a typical 30 year mortgage, for the first five years you're paying about 95% interest, and about 5% building equity. For the last five years, those numbers are reversed. Yes, it's a nasty dirty little trick. Let's update Shakespeare a little: "Second, we kill all the bankers.")
Ah, thanks, that kind of answers my observation above. Have you done the math for the putative 50-year case? (I am too tired to do it)
There's spreadsheets out there that'll do it for you - if you pay for them. There might even be freebie versions on the Internet somewhere; although perhaps without the little sliders that say "Fuck the customer <---> Fuck them a little less hard".
Another interesting detail is that in foreclosure the banks are supposed to rebate you your equity from the profit of the sale of the foreclosed house. And if you don't have any equity - since all you paid was interest - ha ha, sorry pal.
(Not that they did, because they're also allowed to deduct fees and fines and charges and wtf they felt like from whatever they were supposed to reimburse you anyhow. Car repo bankers do the same financial shenanigans. Not to mention fake sales for peanuts plus kickbacks... All perfectly legal - guess who wrote the laws?).
Perhaps someone who works with a real estate (or better, mortgage broker) who has access to an office license for this sort of thing can chime in (at serious risk to their job, though. Those in charge do NOT want people talking about this).
Pulte is another idiot in a maladministration chock full of idiots, morons, nincompoops, and know-nothings. Oh, and I left out incompetents.
RELEASE THE EPSTEIN FILES NOW!!!