BYOB wrote:

Goose wrote:

BYOB wrote:

When was the last time you went to a bank to get a loan?

Step back for a minute and really ask yourself if it's reasonable to pay the same or more in interest as you are paying for the thing itself? I don't care what it is, a house, a TV, whatever. I know low percentage numbers can make just about anything sound reasonable, but percentages are always relative to what specific thing you're talking about.
.

 
2008 was the last time I went to the bank to get a loan. And. as I recall, multiple mortgage types and lengths were available. I went with a note that was fixed for five years and then became variable. 30, 15, 10 ten year fixed rate notes were also available.

What do you suggest?
If you borrow money over a 30 year period, you are going to pay a lot in interest.
It is what it is. If I was in the business of loaning money, I'd expect to be paid interest on the balance every year until it was paid back.You would as well.

BTW, get a loan with no pre-payment penalty, and you can turn a 30 year note into a five, ten, or fifteen year loan at your discretion. Just pay extra principal each month. The "greedy" bank can't stop you.

I'm not sure what you would suggest that we do.
Prohibit banks from charging interest and they will stop writing mortgages.
That won't help home buyers in the least.

All of that is all good if you "just" have enough money to have options. I can not accept that most people have so much money that they choose to pay extra when they don't have to. I'm sure there are exceptions to the rule, as there always are.
There is a difference between making a fair amount of money and an obscene amount of money at the expense of people's livlihoods. Of course I would expect to make money on a loan I gave to someone, I've said that already. I just would never expect to get the same or more in profit as the cost of the item the loan is for. I would never tell someone that I will loan them $150,000, and tell them they had to pay me back the $150,000 plus at least another $150,000 on top of that or more. If I did, I would tell myself to go to hell. .

Well, if you cannot afford to pay any extra prinicipal to shorten the note,  then I guess that the 30 year loan is the one that is right for you. I don't know what anybody is expected to do about that.

Come now. If someone borrowed $150 k for a year and I made them pay back another $150k, that would of course be usury.

But if they take 30 years to pay it back,,,,,, well, what number would you say is fair?
Throw a number out there.
 

I guess my problem lies within a society that seems to have decided that while salaries and compensation should be contained, costs should not. That is lopsided and bound by it's very nature to fail the majority of the people at some point. I'm not making this up, there are a countless number of reliable charts that show this, and how it's worsening every year.

I know you want me to give you a number that will solve it all, but I honestly don't know what that is. But just because I personally don't have the solution doesn't mean I can't identify the problem. I think it would benefit us all to collectively decide the answer.

Last edited by BYOB (3/23/2015 10:16 am)

Ah, forget it.

If people are happy taking half their life paying double or triple to pay off a basic necessity while banks don't even need their own capital to lend you, or even better yet, using your own money from the government to loan back to you at a higher rate, then so be it. No wonder anti-depressants are so popular.

BYOB wrote:

Ah, forget it.

If people are happy taking half their life paying double or triple to pay off a basic necessity while banks don't even need their own capital to lend you, or even better yet, using your own money from the government to loan back to you at a higher rate, then so be it. No wonder anti-depressants are so popular.

Just another perspective on that. We bought (or the bank and ourselves) our home over 40 years ago. It was our second home (our first one was just 28,000 and was a new home then !). The price (from what we paid 40 years ago) has gone up 4x what it was then. So, yes, even thought I may have paid twice the cost over 40 years, I now have an asset worth 4x what I paid. I could have rented, but I think I came out on the upside. Besides, all the interest I paid (the majority in the first 5 or 10 years) I could use as a deduction to my gross taxable income. Now, that said, not all metro areas have seen high appreciations. Some have declined and some have skyrocketed. York city is generally in the first category. Most subburban properties in the area are more likely like what I have seen. 

As far as what lenders (banks, etc) will do is a function of what your ability to repay along with what they can get out of the property if for any reason you cannot fullfill your obligation. Obviously the more you have to put down the less risk to the lender and the better terms they will be willing to give you. When we first brought, you pertty much could not get a loan unless you had 20% down. The last collapse was largely caused by lenders being allowed to make more and more risky loans (nothing down, lending to credit risks, etc) and when the house of cards came tumbling down, we all suffered. Even though lenders have tightened up some of the easy credit (ie-risk), I unfortunately see a lot creeping its way back in. 



 

BYOB wrote:

Goose wrote:

Just at a loss as to what you would replace the current system with.
I also think that it's pretty advantageous that I can live in my house now instead of waiting until I've saved the entire purchase price, and my kids are grown and gone, and I'm an old man.

I know. I wasn't trying to be dismissive of you. I'm also at a bit of a loss as to how the system could be redone, but I still think it should be.

Please don't look at it as a bonus that you get to live in the house you pay for every month. Every month you do pay first, then live in the house for that month. Next month, if you don't pay, you will not get to live there, regardless of the many years you have consistently paid. The advantage goes to the bank, not you. What's even more advantagous for them, is they get to make pretty much the same amount of money on the same house over and over again whenever it sells. Awesome.

As an aside, if I ever strike it rich, everybody better start lining up, 'cuz I'm payin' off mortgages as fast as people can bring 'em to me. It's past time for people to get out of the oppression/prison that is debt.

Wait a second. You do accumulate equity in the house, so you are getting something. Sometimes you do very well, as Tenyson did. (Good for him!)

And, if I stop paying my mortgage, just what would you expect the bank to do besides try to recapture their money?

I'm not trying to be difficult, honest. It's just that I have used credit in my life, responsibly I like to think, and it has improved my life.
As I said, I live in a nice house. One that, if I had to save the entire purchase price before I bought it, well,,,, I'd be renting something I don't like right now. So, I'm using credit, and I honestly think that the bank deserves to get paid for the use of their money. I know, if I use their money for 30 years that I will pay them alot of money. The same is true for a car loan, no? Except, my house may actually go up in value, as Tennyson pointed out.
If I have a problem with that, I will forego some other things and pre-pay some principle. I'm OK with it.
The interest rate is low, and even lower when you count your tax deduction.

I guess that we will just have to agree to disagree on this one. It doesn't diminsh my opinion of you -which is very high - one bit.