patrick.net

Tenpoundbass says

If this is true, then it's bullshit. It sounds like the banks will only raise the interest rate, so the payment only goes down marginally.
$500 off a $3500 to $4500 mortgage isn't much of a smart incentive. It needs to be cut at least $1500 or more. America's RE market wont be healthy again until your average mortgage is back to $1200 to $2500 for a non gated neighborhood, sfh ranch house, depending on the location and the house you got.

We just moved. I told one of the moving guys that if I were single, all I'd need to move is a small Uhaul tow trailer. 1 bed, 1 TV, 1 Lazy Boy. To that, the wife said, "But then you'd be single with no loooooooove."

Maybe its time to stop policing the world and focus domestically.

Any low monthly mortgage will allow you to 'latch on' to a property that is collateralized by itself. You can always refinance or pay the loan down faster if your expanding circumstances allow.

However, it remains that 'ownership' is always a delusion as long as you have the requirements of property tax and the threat of reposession. That makes the local Guv always your landlord. However, property ownership is a delusion that people want to have anyway and wimminz like to birth their progenies in those circumstances. Call it a false sense of security.

Of course, DEW Dresden has added another feature to eminent domain. If the wealthy twats of Pacific Palisades couldn't guard against it, nobody can.

Even wealthy people whose fortunes have turned have had their properties on the auction blocks because of property tax defaults.

The solution is 20% downpayments for any FHA loans, not negotiable.

Any loans not 20% down cannot get government backing.

THAT will solve the affordability crisis.
https://www.fha.com/fha_article?id=2778

Some people really don’t understand basic math.

Okay let’s play that math out.

$400,000 home
50yr Mortgage
Today’s rates

In 10 years you’ll have $14,000 in equity.
During those ten years, in addition to the mortgage payment, you also paid an average of $6,000 per year for property tax.

So that $60,000.

You also paid an average of $3,000 per year in insurance.

So that’s $30,000.

Property tax + Insurance: $90,000

So you paid the mortgage + $90,000 in insurance and tax to get $14,000 in equity.

You also paid a monthly mortgage payment of $2,380. So that’s $2,380 x 12 x 10 =$285,600.

Finally, your housing value increased on average throughout those 10 years to about $430,000.

Congrats. You paid $375,600 over ten years, your value went up $30,000, and you got $14,000 in “equity”.

You’re now in the hole $331,600.

https://x.com/teameffujoe/status/1987669534841675917?s=20

One thing about our 30 year, fixed rate, non-callable mortgages is that it is a big FU to the banks. Our forefathers really didn't trust banks at all. Generally speaking with homeownership, your monthly nut decreases with time. If interest rates decrease. you can refinance at the lower rate and decrease your monthly payments. If rates increase well la te da your payment doesn't increase except for taxes and insurance, and for most folks your income will exceed the rate of inflation (most people get paid more the older they are).

Rents generally don't decrease, but housing debt gets easier over time. This is regardless of property appreciation which generally matches inflation.

mell says

Yep it's like renting but worse as you can't easily switch residence and travel the world. Even 30 years are only good when interest rates are low and/or you purchase early in life, or the housing market appreciates above your interest rate consistently.

Most everyone refi's though for toys and fun or debt pay down on credit cards and said toys. The loan eventually or essentially is a 50 year loan. I don't think a 50 year loan should be allowed out the gate.

Refi's should be done to lower payments if you can with minimal fees. That's not how the average American does it. A 50 year loan would inflate prices and everyone would take cash out. Boom. That's when you have a bubble. I'm a hard no on 50yr mortgages.

WookieMan says

I'm a hard no on 50yr mortgages

What if the interest rate was 1% ??? -- Bet then it would be a hard-on.

Misc says

What if the interest rate was 1% ??? -- Bet then it would be a hard-on.

What if I woke up every morning to Sydney Sweeney riding me cowgirl, too ??? - Definitely would get a hard on.

WookieMan says

mell says

Yep it's like renting but worse as you can't easily switch residence and travel the world. Even 30 years are only good when interest rates are low and/or you purchase early in life, or the housing market appreciates above your interest rate consistently.

Most everyone refi's though for toys and fun or debt pay down on credit cards and said toys. The loan eventually or essentially is a 50 year loan. I don't think a 50 year loan should be allowed out the gate.

Refi's should be done to lower payments if you can with minimal fees. That's not how the average American does it. A 50 year loan would inflate prices and everyone would take cash out. Boom. That's when you have a bubble. I'm a hard no on 50yr mortgages.

Agreed. I'd never dona heloc/refi unless the rate is spectacular, i.e. 2% or less (currently at 3%). The main issue here is that if something takes you to pay a lifetime or more than a lifetime to own it, you cannot afford it in the first place, and it encourages people amd institutions to game the system and create huge dislocation, private and public.

How is it different from somebody refinincing a 20 yo 30 yr mortgage into another 30 yr mortgage?

If one wants to have a forever mortgage he absolutely can.

RWSGFY says

If one wants to have a forever mortgage he absolutely can.

As long as it won't be under FHA, I'm fine with a private bank offering a private loan like that, with zero government guarantees and the bank and loanee required to sign a no-taxpayer bailout ever clause.

Any states that back 50-year loans have the amount they guarantee deducted from all state block grants.

MolotovCocktail says

I am sick and tired of the do-nothing Republicans and the know-nothing Democrats being in bed with Wall Street, forcing us to become debt slaves, forcing us to accept this unrestrained usury.

Wall Street has the money and the time to go to DC and make sure all the laws are in favor of Wall Street. Wall Street will donate to pay for advertising (including AI bots on social media) to split people on wedge issues in various ways, guaranteeing that Wall Street's candidates win.

Most of us don't have that kind of money or enough time to really even pay attention.

I suppose that now and then an honest candidate gets elected, but it's not enough.

Tenpoundbass says

50 year mortgage isn't as devastating as it seems.

It is devastating in that it is a scheme to promote grossly overpriced homes through a lower monthly payment. A better strategy would be to encourage owning a home free and clear by age 45.

Yet another way to keep asset bubbles inflated and avoid any price correction.

No one wants to take the bitter medicine of letting prices go down to the point people can afford them.

People need the prices to come down. Not creative financing. Sad that our leaders want to keep going the wrong direction.

I feel the same way about stock market and economy and stimulus/rate cuts... It's ok to let some economic pain occur, since that kills off the resource draining malinvestment companies... But instead, every fiscal and monetary decision we make is geared towards blowing the bubbles bigger and never letting natural selection to run it's course.

I would see it as a 'hump' loan, to get people over the economic hump and into the homes until the rest of the economy catches up. If Trump does what he wants with the repatriation of industries and financing of crumbling infrastructures with native labor, there will be jobs out the wazoo and things will get better for the younger generation and those willing and able to work.

So let's say I'm 30 when I buy my first home. 50 year mortgage puts me at 80 if I pay it off per the schedule.

Didn't Japan get 100 year mortgages that were inheritable? How did that work out?

And what of the boomers houses (primary homes, vacation homes, etc?) Ultimately where to they go? To the nursing home? The bank? (Reverse Morgarges) Does Black rock buy them up and convert them to rentals? If the kids inherit them do they live there? sell? convert to STR via Air BNB or similar?

As our parents age (as most of us on this blog are Gen X) what becomes of their real estate holdings will make a significant impact on the affordability or lack thereof, for our kids.

GreaterNYCDude says

Didn't Japan get 100 year mortgages that were inheritable? How did that work out?

They had 50 years, too.

Desperate attempt to keep their housing bubble propped up.

DeficitHawk says

No one wants to take the bitter medicine of letting prices go down to the point people can afford them.

Pretty much everyone with any political power has real estate equity and would rather keep young families locked out than see his or her equity decline.

This is suicidal in the long run. The Roman Empire slowly died in a similar way, as the large majority of people realized there was no longer any reason to support it.

The solution is the single tax on land values, Georgism. No tax on income, sales, or anything else. Just on land values. This will end our systemic speculation on land values.

Patrick says

DeficitHawk says

No one wants to take the bitter medicine of letting prices go down to the point people can afford them.

Pretty much everyone with any political power has real estate equity and would rather keep young families locked out than see his or her equity decline.

This is suicidal in the long run. The Roman Empire slowly died in a similar way, as the large majority of people realized there was no longer any reason to support it.

The solution is the single tax on land values, Georgism. No tax on income, sales, or anything else. Just on land values. This will end our systemic speculation on land values.

Hedge fund guys will pay no taxes. One big reason stocks go up, because gains are barely taxed so it’s better than labor.

Working for money is hard, investing is free money with no work.

DemoralizerOfPanicans says

As long as it won't be under FHA, I'm fine with a private bank offering a private loan like that, with zero government guarantees and the bank and loanee required to sign a no-taxpayer bailout ever clause.

Of course it would be backed by taxpayers. That's why the proposal is coming from Trump. If a bank wanted to do it themselves, they wouldn't need the government involved. Banks won't even do 30 year without government backstop. Banks just pass them through to fannie/freddie.

DeficitHawk says

DemoralizerOfPanicans says

As long as it won't be under FHA, I'm fine with a private bank offering a private loan like that, with zero government guarantees and the bank and loanee required to sign a no-taxpayer bailout ever clause.

Of course it would be backed by taxpayers. That's why the proposal is coming from Trump. If a bank wanted to do it themselves, they wouldn't need the government involved. Banks won't even do 30 year without government backstop. Banks just pass them through to fannie/freddie.

Agreed, and that's why it's a shitty proposal. However as you mentioned 30 year is already backstopped, so it's not a novelty

Just in case, if anybody thinks 20% or even 15% down is still normal:

https://www.fha.com/fha_article?id=2778

All we need to do is go Back to what worked for 50 years until the late 90s/early 2000s.

DeficitHawk says

Of course it would be backed by taxpayers. That's why the proposal is coming from Trump. If a bank wanted to do it themselves, they wouldn't need the government involved. Banks won't even do 30 year without government backstop. Banks just pass them through to fannie/freddie.

I know. I mention it because some are saying "Why take away bank freedom to loan money?" When the banks want the government to insure and help push these loans.

Looks like the 15 yr car loan is real, too:

You also have the option to cash out re-fi your vehicle loan every year or so. The lender doesn't really care if you go negative equity, they will simply raise the rate to 29.9%.

While they're at it why not 40 year terms for student loans? You work for 40 years .. why not spread out the cost of your schooling over the life of your career? And because your earnings are lower earlier in your career, mak the first year interest only to keep the payment manageable? /s

(And yes I realize that in many ways this is already done.)

All of this is interconnected. The debt loads. The lower birth rates. The slow decline of what was once a robust middle class. Even women in the workplace. My goal in life has been that my wife works because she WANTS to not that she HAS to to provide for the family. Knock on wood, excepting a couple of brief stints being out of work, I've been able to do just that. But 20 years ago most of us were here talking about the high cost of housing and how it was nonsensical and could not continue. Yes the bubble burst in '08 but here we are almost 18 years later. And not a damn thing has changed. If anything it's gotten worse.

Let's not forget that the 30 year mortgage combined with our demographics is a huge advantage vs. the rest of the developed world. Try going to Europe and buying a house - you'll quickly appreciate how easy the U.S. makes it. In my limited exposure to European friends and peers, the most likely path to home ownership involves inheritance.

The availability of financing is a major driver of our domestic economy. Not just New homes, which are just a sliver of the housing market. Existing home purchases result in ton's of money spent at Home Depot and Lowes. I remember being shocked after buying my first home what a money pit it was. I was young and had only rented and just assumed my only expense would be mortgage and utilities. Boy was I wrong.

Also, haven't 50 year mortgages been available in California for like decades now?

To my mind, anything that ties people to a fixed asset is a good thing. It makes responsible citizens out of us. A country where everyone has something to lose is a country where people follow the rules.

As my Dad used to say - "don't mess with a loser - they have nothing to lose".

@stfu - government backstopping mortgages only raises prices as it prints money for banks and passed costs to taxpayers. Our shitty government did that with healthcare costs, college costs and housing. Everything they do is to balloon prices. We aren’t capitalism, but a one giant balloon economy, completely fake economy. People can’t afford things in a “greatest economy ever” because economy is based on making things out of reach,

Is Donnie T. implementing "you'll own nothing and be happy" program? 🤡

https://x.com/JoshuaSteinman/status/1988260949112091037



I still support Trump, but he should do all these things.

And should release the Epstein files.

RWSGFY says

Is Donnie T. implementing "you'll own nothing and be happy" program? 🤡

Yes

I voted for Republicans because of Trump, I wouldn't have if someone else was the Presidential candidate...I would have just not voted. If he doesn't substantially change H-1B program, I am done with voting.

stfu says

Also, haven't 50 year mortgages been available in California for like decades now?

I live in California and have had a few mortgages here. I've never been offered a 50 year option from any lender I've worked with. Never heard of anyone who has.

Maybe they exist from some niche lender, but they'd be non conforming and probably significantly higher interest rate.

I have a 15 year mortgage anyway, I'd have no interest in a 50 year unless it was crazy low interest.

DeficitHawk says

, I'd have no interest in a 50 year unless it was crazy low interest.

Anything but this would be insane.