Average age of a first time homebuyer is now over 40. Even at a reasonable interest rate, most buyers would die before they actually own the house.
As intended
Can’t pass it on to your kids when the bank forecloses on it
Were not enough boomers taking them up in reverse mortgages?
Because that’s where all my “generational” wealth went. “We can’t take it with us Jimmy” though we did, in fact, take it from those who came before.
Late stage capitalism demands that you will own nothing.
I know someone living in the Netherlands (home of Lemmy.world!) that told me they had interest only mortgages that didn’t pay toward the principal and that this was common over there. It seems like these new 50 year mortgages in the USA are a step going that same way. Anyone from that area confirm this?
I’m Dutch, just bought a home, and I’ve never heard of that.
Edit: I think that is called an “aflossingsvrije” mortage, banks stopped providing those after 2008 for obvious reasons.
Eidt 2: Apparently it still exists, but can no longer be used to finance an entire house. From my research it is often still possible for up to 50% of a house’s value. It was also not an option in the way we bought our house.
Congratulations on your new home!
Thanks for providing that info on the “afloasingsvrije” mortgages. It was a few years before 2008 when she bought, so that tracks with what you’re reporting.
Here in the USA we have fixed rate mortgages, where you have a single fixed interest rate for the entire length of the mortgage, but I know that not all countries have that. From what I understand in Canada the rates fluctuate during the mortgage where you can get something like fixed for 5 years (maybe 10?) but then the rate can increase on the existing mortgage you’ve already got.
How does the Dutch system work? Fixed for life of mortgage? Continuously variable? Fixed for a time like Canada? Something else?
We have different types of mortages, but most (maybe all, at least the most common types) have a fixed rate over 30 years. Maybe variable rates exist, but they are at least very uncommon. Shorter mortages are also possible I think but are of course very expensive.
One weird thing we have is that part of the interest you pay is tax deductible. (Progressive parties are i.m.o. rightfully trying to abolish this subsidy for the owning class, but I digress.) for this reason there is a type of mortage where you first only pay the interest, and slowly start paying off more and more of the mortage, which means your net mortage fee slowly increases over time, which is nice if you expect your income to increase over those decades.
One weird thing we have is that part of the interest you pay is tax deductible.
This matches the USA system for mortgages.
for this reason there is a type of mortage where you first only pay the interest, and slowly start paying off more and more of the mortage, which means your net mortage fee slowly increases over time, which is nice if you expect your income to increase over those decades.
This sounds new to me. In the USA we do have amortized mortgages so a very high percentage of the monthly payment is interest with little going to principal. Over time that relationship flips where you’re paying more principal that interest. However, in our system the mortgage payment stays the same, only how much of that fixed payment goes to interest vs principal changes.
Oh yeah the gross mortage payment stays the same. But over tme less of it is tax deuctible. Sounds like that system is the same across the countries.
In the UK they were popular for “buy-to-let” properties - so it didn’t really matter that you have barely any equity in your second home, so long as the rental income covers the interest payments.
Dutchie here, nope. We are paying both principal and interest. Plus when i to it out, my mortgage was 102% of my home’s value. And as it stands, the bank owns my ass exactly until I retire 🤷♂️
At least someone wants to pay for your ass. I can’t give this thing away.
Not sure if this is what they were talking about, but balloon mortgages are a thing here too. I can’t ever imagine considering one, but they exist.
Balloon mortgages would be good in only two situations:
- you’re not planning on living in the house very long, so you likely exit before the balloon payments hit.
- you believe interest rates will decline in the next few years and you can refinance to a fixed low rate
I don’t ever see myself using a Balloon mortgage. Worse, they are frequently sold via predetory lending methods. Unsavvy buyers are convinced to take a balloon mortgage not understanding the payments will rise dramatically in the years ahead. This can lead to eventual foreclosure when the owners can service the higher payments.
If you’re not planning to live there long, I don’t think you shouldn’t be buying; that’s one of the few times I’d choose to rent. I guess maybe if home prices are rising then you can accrue some equity, but then you risk buying at the top of the market. I genuinely how it would compare to a fixed rate mortgage though.
If you think interest rates are going to decline, you can easily refinance a fixed rate mortgage as well. I don’t see any benefit in that scenario, but there’s a downside in that if rates don’t go down you still have that balloon payment to worry about, and if you don’t qualify for a traditional mortgage, you’re really in a bind.
Maybe if you’re flipping a house it makes sense, especially if you want to minimize cash outflow. Otherwise, there are so many more downsides that are much more severe than the mild upsides that you might gain. Perhaps there’s a few niche applications that I haven’t considered though.
How would that work, even on paper? Not being a dick, just don’t understand. So it’s literally just, “you can never own this property fully?”
How would that work, even on paper? Not being a dick, just don’t understand. So it’s literally just, “you can never own this property fully?”
Yes. The tradeoff is you have a property that is in your name (with a bank note attached), and if the property increases in value during the time you own it, when you sell, you pocket the difference. If you have a fixed interest rate, it also caps the growth of your payment for housing for the entire time you live there. There’s quite a bit of value in that.
Screw .world
you…realize thats not only where this Lemmy Community is…but also your user account, right?
Yep.
Nothing is stopping you from moving to another Lemmy server and blocking .world entirely. You have to find some value here if you haven’t done that already. If you hate it so much why are you still here and posting instead of on another server with other non-Lemmy.world communities?
Because I’m lazy
The year I turned 40, was the year I moved into my first non-rental property.
I’m living proof that shit is fucked up
I’m turning 40 in a few days. I finally moved into a crazy beat-up fixer-upper/possible crime scene about 3 weeks ago.
Welcome to the club. Were you able to afford the fixer upper on your own, or did you need to split the financial burden with another person?
I found a rare rent-to-own locally. So it’s in my name and otherwise the same as buying, except the original owner is the bank. As long as I stay 2-3 years, I come out ahead if viewed as a rental. If I make it 20 (or can get ahead/clever in various ways), I own it outright/maybe make a little bit.
Good luck.
I’m a couple of years older and JUST escaped renting. It’s ridiculous!
Welcome to the club.
What percentage of your income now goes to your mortgage payment? For me, it’s like 110%… But I have help, so my share is only like 35%
It’ll actually work out better for me since I currently live by myself and pay all the rent and utilities, and I’m buying with my partner so I’ll finally be able to share the load 😀
And then their kids keep paying until they die and still haven’t paid it off, even though they’ll have paid twice the original amount by that point. Whoever came up with this bullshit is probably right now buying their third yacht from the bonus.
30 year mortgage means you pay for the house twice with interest. 50 year mortgage means paying for the house 3x.
So basically you won’t own shit.
Never did.
A 50 year mortgage will be a lot like renting. Because the bank will own your shit until you die.
That’s what we get for saying “why can’t I get a mortgage when I pay more in rent just bc my credit is bad”, the banks figured out how to rent properties to you.
Headline: Save 200 dollars a month with a 50 year mortgage over a 30 year!
Subtext: … and end up paying double the interest to us for the benefit, and die before your loan is paid off so we get to take the house back from your corpse, sell it on the cheap to a corporate real-estate investment firm (that we have stock in) for just enough to cover the remaining mortgage balance. They’ll turn your multi-generational family home into a shitty rental property or leave it empty to keep the rest of their rents high and your children get nothing cuz fuck em!
I would rather eat my own children than sell them out to the future the banks have in mind.
These people have abandoned humanity.
These people have abandoned humanity.
Well fucking said.
Modesty
I can’t believe this is real.
Home ownership out of reach? No problem, just never own a home. Bing bang boom.
A 350k house assuming the national average on taxes and interest rates comes out to just shy of 1 million dollars. Over 650k in interest. The payment is $1700 which to put it in perspective my home was 260k at 2.8% interest and my payment is $1830 on a 30 year mortgage.
Is that on the 17% joke rate?
No it’s with 5.5% interest and a measly 5% down payment.
In Australia the Average mortgage loan term is over 30 years but the average duration before its paid out or refinanced is only 8 years. Id be more worried about the terms and conditions surrounding early payout and refinancing than the theoretical maximum term of the loan on paper because if they want to be truly predatory thats where it will be hiding.
Well, the USA has 96 month automobile loans and this kind of shit does not surprise me. None of the asswipes in DC are discussing the piss poor income distribution in the USA which leads to affordability and a decent middle class life. In 1789, the French were 100% correct.
A mortgage that lasts longer than your career is how you build generational debt.
I’m gonna be dead in 20 years, so I’m so sorry to have to turn this down lol
Me too bro, me too.
Subprime Rides Again, baby.
So why do houses exist if nobody can have one?
Corporations are people and they can have as many as they want???
Sadly I’m afraid you are correct, that’s exactly what’s playing out. They’re squeezing everyone into becoming renters. We will own nothing and be h̶a̶p̶p̶y̶ vengeful.
Also, if the dealership is offering you 29% on a 7 year loan, please walk away. Stop giving in to that shit. It’s better for you, and it’s better for the rest of us.
I’ll take a 90% 1,000 year loan please.
(hint: it would be over $30,000 per month payment)
We laugh at this, but the older generations still remember when the mortgage interest was this high. I don’t know where you guys are from, but there is an old news reel from the 1970s here in Ireland when young families at the time complained of “high” house prices of up to 72,000 pounds, with mortgage interest of 14%. The folks on social media had their jaws dropped on learning of how high the interest rate was, but how cheap the overall property value was back then. Now how much are those said houses at the moment? They are now worth between €690,000 to €1.5 million. High valuation but the interest rate is down in proportion. In any case, only few could afford to buy houses these days due to inflation and wages haven’t kept up with it.
