this post was submitted on 11 May 2026
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me_irl
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But the 1400 doesn't require any trust since if they can't afford that, they're out. If they can't afford the loan, the bank would be out the loan sum.
the bank isn't out of jack shit, they reposess your house.
Which they can re-sale at a higher value to the next fool. So it's in their interest that you pay for a while, then sale or fail.
Congrats, you recreated the 2008 financial crisis!
If I had an Apple that you want and I sold it to you but you didn't eat the apple and it never got spoiled, I could sell the apple to someone else if you didn't finish payment. You are just one step in a series of many many re-sales of the same house. The house is owned by the banks. They just change which bank is on the title after your temporary ownership. You see, you have this funny thing we all humans have...limited shelve life. Banks don't have that. They can last for as long as many generations of people. So long as the financials work, they can stay afloat. Not you. You die, your kids die, their kids die. People tend to not stick around the same house forever. So every interchange between you and the bank, the bank always wins. You always lose to inflation. The bank always wins because a house always is worth what people are willing to pay for a house...it rides inflation.
The life of a mortgage is worth far more than the house. It’s in their best interest that you stay in the house for the entire 30 years of the mortgage and pay for it on time every time. Foreclosure is expensive.
Banks do not make a profit on foreclosure. If the house sales for more than the bank is owed (including foreclosure fees), then any surplus is given to the original owner.
So the bank gets the money they are owed?
Not necessarily. There is no guarantee that the house will well for enough. Normally this works fine, but sometimes a loan can be underwater, and have a larger balance than the house is worth; or it could not have enough equity to cover the cost of foreclosure and flipping. This is why the US requires mortgage insurance for mortgages with less than 20% equity.
You could imagine a scenerio where banks find a loophole to skirt the PMI requirements causing a real estate bubble to drive up the purchase price of houses. Them a recession causes widespread defaults, further triggering a collapse of home prices, forcing financial institutions to be unable to recoup the cost of loans. Loans which, incidentally, were rated as very unlikely to default due to other financial schenenagans. We call this scenerio 2008
That's not completely true, because it depends on the future value of your house. Plenty of banks got burned in the early 2000s when they gave out too many loans and then all of a sudden the houses weren't worth what people owed on them.
If there is ever an economic crisis that results in housing prices dropping, the banks get bailed out.
I'll shed a single tear for those banks who reposessed those houses that are now worth an absolute fucking fortune when I get a house of my own.
I'm not crying for the banks, but that's why they don't just give out loans to anyone.
Foreclosed houses very rarely sell for what they’re worth and it’s not uncommon for people who are foreclosed on the trash the house on the way out.
When my wife and I were recently looking for a house in the city we moved to recently one of the houses we looked at had had the air conditioner taken by the previous owners because it had been foreclosed on. I’m serious, the entire fucking condenser was taken.
yeah but you're not going to make me feel sympathy for JP Morgan Chase.
They should've cut back on their avocado toast if they wanted to run a successful bank
I wasn’t trying to make you feel sympathy for a bank. Just pointing out that foreclosing on a house isn’t profitable for a bank.
That $950 mortgage also doesn't include taxes and insurance plus the cost to maintain a house. All of that is wrapped into the cost of rent.
Mortgage calculators are deceiving.
And the profit the landlord takes on top of that. Landlords don't generally rent out to break exactly even on cost.
Landlords also do cheaper repairs.
When it's your house you're likely to go for the higher quality options when the major repairs hit and do more timely repairs on things landlords will ignore.
Even in the best of cases, landowners may not be generating a direct profit but are generating equity in the home.
I had to explain this to one of my landlords (he was a first time landlord and it was his old place) once a long time ago. He was quite shocked that he wasn't making nearly as much money as expected when the homestead exemption was lifted from the home. He tried to increase our rent well above the average for the area because of it and we had to threaten to walk.
You'd be stupid to do that, even if you were genuinely trying to be charitable about renting. You'd want some profit for repairs and sudden issues.
Revenue for repairs and sudden issue is still breaking even, the point of profit for landlords is to well generate profit on the bottom line.
A landlord is almost always making money even if they are just "breaking even" on the mortgage.
If the landlord is still paying for a mortgage, the profit goes into their equity gain.
Once the mortgage is paid off, the profit goes into the landlords pocket.
This is how many people get started being parasites on society. They have other people pay the bank while they gain the assets of their labor.
Why the fuck should the price to rent something give profit over the monthly pay of a loan to own it?
Landowners want renters to pay for their stuff. They're lazy leeches.
See, your foolish mistake is applying morals and logic to the profit drive. There are none to be found, there. Just people who want more money, because they can, and have the law behind their back, threatening you with homelessness and the destruction of your continued existence.
Jokes on my landlord, if I ever lose everything, so does he. 🔥
Damage to Capital is based.
Every mortgage calculator I have used includes fields for taxes and insurance.
But it also doesn’t include the tax deduction on the interest, and the fact that the principal is essentially a saving account you are paying into yourself every month, which will come back to you when you sell the house.
It’s really fucked up how they prevent people from home ownership. And they even try to sell this through the mainstream media as making it sound like sometimes renting is a better option. In some super rare cases it is a better option. But mostly it is not.
Anyone thinking they'll making a dent on the principle for the fist five years is going to be very disappointed. Selling get five years, closing costs are likely to put you in the red.
Renting is better only if you're not committed to the area. But if you end up renting the same place for 10 years, you're definitely losing out.
There's no single solution here and playing the media on this one sounds childish. Read better media.
Five years in and 1/7 of my principal is already paid off. That's a nice dent.
That's about the cost of my mortgage, and I also pay $300 in property taxes, $400+ utilities, $120 insurance and have to pay for repairs. That $1400 rent number seems really cheap, I'm guessing it's comparing a single bedroom apartment to a house? Definitely not apples to apples.
Except now they can sell the home. Which probably has appreciated on value since the loan. Plus the loan interest since it was purchased originally. And payments at the front of a mortgage are almost entirely interest since the principal is so high.
Any recession can cause a downward pressure on house prices at the same time as difficulties paying for a mortgage. You may not be able to sell the home for enough to pay off the mortgage when you get into trouble.
I have never in my life seen house prices go down. They just quit going up as fast.
In my life I've had two times when they went down along with unemployment going up.
The 2008 crash and a local crash due to the biggest employer in town being on the verge of bankruptcy in the 1990s.
Yeah, that idea is very 2007. The 08 crash was a great time to buy a house if you still had a job because a lot of foreclosed houses were for sale for way less than they'd been bought for by their previous owners.
You're right, I had a brain fart