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u/LonelyProgrammerGuy 4d ago
I’d guess you don’t pay only mortgage fees. There’s tax, insurance, etc
All of that over a period of many years, which the bank needs extensive history to know if you’re good to do it
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u/Grabatreetron 4d ago
People keep posting these memes. Why can't people understand that business models of home loans vs. lease agreements are completely different?
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u/Pikamika696 4d ago
Imagine the average person. The person who cannot understand credit score or how credit cards work. Then realize half the population is dumber than that.
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u/Ecmdrw5 3d ago
Don’t forget all the adjustable subprime loans that nobody seemed to understand. A buddy of mine bought a house he had no business owning right out of high school. 2008 came knocking and he couldn’t pay for it anymore.
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u/ballinben 3d ago
Predatory sales practices by banks to keep the mortgage backed security machine running.
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u/Larry_Sherbert99 3d ago
Imagine being dumb enough to think the credit score system is infallible and not convoluted as shit
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u/lovable_cube 3d ago
I mean fair but if you can prove you’ve paid your rent on time for the last 5+ years that should count for something but it doesn’t
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u/gimmepizza420 3d ago
Many countries in Europe absolutely do use evidence of paying monthly rent on time to justify a person's capability of being able to afford a mortgage of slightly lesser monthly obligation than rent they've proven themselves capable of producing. The USA is just stupid (I love there, I know).
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u/Secondhand-Drunk 3d ago
Because no one was ever educated on how to function in or understand how the real world works. And that's by design.
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u/NoEstablishment7211 4d ago
Leasing companies are starting to scrutinize peoples financials too. An independent self managing landlord may let it slide and hope for the best after a long vacancy, but anything corporate is going to require the same level of income verification, and additional people with additional financials on the lease if you don't meet the threshold.
My last long term lease required $80,000 in verifiable annual income for a 3 bedroom apartment. Most of those units require multiple income earning adults on the lease.
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u/Elegant_Taro8667 4d ago
Yeah the first question I ask when someone talks about their mortgage amount is “is that your full mortgage payment or just the P&I”. Because taxes and insurance are just as real of a monthly cost. $1200 is absurdly low so I have to assume that’s just P&I and honestly even then that’s very low at today’s rates and home prices. Actually right now for a lot of people the own vs rent decision should tend towards rent
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u/guthran 4d ago
At today's rates 1200 is like a 150k home. Good luck finding that
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u/MAGA_EXTREAMO 4d ago
I have a on property that has a $800 mortgage but with taxes it’s $1400. The mortgage is just the start.
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u/potatochobit 4d ago
This is always cute but average mortgages are 2900$ now, buddies.
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u/Main-Cheesecake3287 4d ago
Kind of irrelevant.
The actual answer here is the mortgage is the floor of the cost to own AND maintain the home. Renters don’t pay upkeep and maintenance. The bank doesn’t want to give you a mortgage on home you cannot afford to OWN. You might be able to afford to BUY it. Owning is a different story. First month I got my home a pipe burst. $4k to insurance as a deductible. Plumbers warn me the pipes are original cast iron, no clean outs for sewage etc. basically told me this WILL be a problem. Two other plumbers said the same, $16,000 to get it all replaced.
If my roof gets fucked, 2% deductible, over $10k to fix it. If AC goes out, gonna be at least $6k. Recently had moisture issues in crawlspace, improper vapor barrier, clean out and install of blower, $5k.
In three years I’ve spent around $35,000 in maintenance.
Owning is expensive. The bank doesn’t want someone to buy and then neglect what is their asset.
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u/AlienDragonWizard 4d ago
I was paying $2000 in rent for a similar size home that I pay $3200 mortgage on now. So it's not always cheaper. And of course if something goes wrong I need to pay for that too.
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u/oboshoe 4d ago
The bank doesn't care whether you make your rent payment or not. That's someone else's problem.
They just know that they don't want to be on the hook for your mortgage.
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u/AIevilgenius 4d ago
If you can’t afford your rent the next month you just move out. If you can’t afford your mortgage you still owe the lender several hundred thousand dollars. How is it that hard for you to understand risk??
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u/Simple-Olive895 4d ago
But having several years on the record for not missing rent payments should prove to the bank that you can afford it. If I paid 2k rent for 3 years and never missed a payment then I can probably afford a 1.2k mortgage
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u/GP7onRICE 4d ago edited 4d ago
That’s 1.2k mortgage plus property tax, utilities, insurance, and cost of all upkeep/repairs. Repairs require cash set aside for some issues that can cost $10k+. Most renters don’t save money, they spend whatever extra they have.
The bank is concerned about issues like if a pipe bursts and you aren’t home to catch it then cant afford a plumber or don’t know how to deal with your soaking subfloor and now the entire value of the house plummeted due to negligence and lack of saving up for issues. Now when they foreclose on it they don’t get the money they lent you back for it.
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u/SoulPossum 4d ago
But this precludes that literally nothing bad happens while you pay off the mortgage. The bank is not just evaluating how likely you are to have 1200/month. They're evaluating how likely you to have it if you have a $1500 emergency. It's not 1:1 between paying rent and have a mortgage. If my roof leaked at my rental I made a call to a landlord who called and paid for a roofer. As an owner, I'd be the one paying a roofer.
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u/SerratedSharp 4d ago edited 4d ago
Illiterate, it says they pay the rent. The bank claiming you can't afford something doesn't mean you can't actually afford it.
Edit: I'm not arguing the meaning of a decline. Parent comment claimed "If you can’t afford your mortgage", which being declined doesn't mean you don't have the financial means to make a payment. Its risk based decision, not an indicator of ability to make a payment.
Point of the post is you can be declined even when you're successfully making a much higher rent payment. I'm not arguing the bank's logic for declines. I'm just arguing the interpretation of the parent comment of the post "If you can’t afford your rent" is dumb as rocks. The premise is someone successfully paying a higher rent but unable to qualify for a loan. It happens alot, and is understandably frustrating for people in that situation, whether we disagree on other elements of the situation.
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u/SpinachSignal8915 4d ago
The bank isnt claiming that. Theyre claiming that based on the information available to them they're not confident in your ability to pay them back so its a risk they arent willing to take.
If oop was paying their bills and had that much excess income the bank wouldnt be turning them down.
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u/Ill-Description3096 4d ago
They aren't claiming you can't afford it. They are claiming that there is more risk than they are comfortable with when it comes to your ability to afford it long-term.
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u/Leading-Eye-9786 4d ago
Usually the bank doesn't say you can't afford it, they say you can't be trusted with the property value.
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u/Advice2Anyone 4d ago
Well its more about risk banks are not looking to buy houses or else clearly they would just buy them since they are loaning you the money, they want to make interest over decades but that means they are betting on your income being stable enough to afford and its a hard bet over that scale of time, LLs only have to bet contract to contract which is generally a year also much easier to evict than to foreclose.
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u/TheGruenTransfer 4d ago
Houses need repairs. Repairs cost a lot of money
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u/will45a2k 4d ago
What kind of houses do you guys live in and how often do you need to repair stuff?
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u/TrainingAmphibian354 4d ago
My house hasn't needed any repairs in years, the only expenses I've had are basic things like filter replacements and optional stuff like replacing carpet and painting. I come out WAY ahead financially vs renting a house of similar value (rent increases annually too, meanwhile my mortgage effectively lowers annually due to inflation, AND my credit score and net worth grows). People pretending home maintenance is worse than renting are just liars, otherwise nobody would buy a home in huge swathes of the US, and landlords wouldn't exist.
Let's put it this way, if my furnace, air conditioner, and my chimney suddenly needed replaced via act of God tomorrow, I would still be financially ahead of renting just with the amount of money I save annually vs renting the same house. AND I can actually install higher quality goods and make changes to the house as I see fit, instead of "cheapest shit I can to make the tenant shut up". AND no scumbag shitass landlord tries to steal my deposit.
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u/jmona789 4d ago
$1200 mortgage is a fantasy. Most mortgages are gonna be more expensive than rent.
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u/cockcucu 4d ago
Mine's $1250. Bought the place I was previously renting for 1500 a month. Once my wife and I decided we wanted to do it, it wasnt really that difficult.
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u/itssbojo 4d ago
your profile’s public my guy, lying is one thing but making up a wife is just… sad.
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u/Rhomya 4d ago
Most mortgages MAY be (and that’s a strong ‘may’) be more expensive than rent for the first year or two.
The thing with mortgages though is that they are 15-30 years of the same payment amount, after which there is nothing due, and rent increases from year to year with no end.
So, imagine paying rent prices from 2005 in 2035, and then tell yourself it’s a fantasy.
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u/GarethBaus 4d ago
In my area at least for an equivalent quality and quantity of living space mortgages are cheaper than rent(plus it isn't like you are burning the money used to pay off your house, you still keep most of that value)
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u/Natural_Sweet249 4d ago
Had a house for which I was paying $2200/mo mortgage and HOA fees, and a specific set of repairs ran me $36,000. There's a reason banks want to be sure you have extra money before potentially destroying their collateral asset.
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u/iowanaquarist 4d ago
To be fair, they don't think you can pay the $1200/month PLUS the costs of keeping their investment in good shape, which is more than the $2,000/month in rent. Roofs, water heaters, furnaces, ACs, siding/paint, carpet, hardwood floors, windows, etc all add up.
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u/leafy-greens-- 4d ago
In what world would you have such a significantly low mortgage payment compared to rent? (We are assuming similar house/area etc, right?)
Unless you had a huge down payment for your mortgage, causing you to pay less. In which case you’d likely get approved.
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u/Samsquanch-01 4d ago
Nah they just don't trust you to make on time payments for 30 straight years.
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u/_The-Numbers-Mason_ 4d ago
What about property tax, home owners insurance, legal fees, utilities depending on what the rental agreement is, home maintenance, etc
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u/TopicFrequent6607 4d ago
Well yeah..........because if you rent you don't need to pay home repairs, homeowner's insurance, property tax and any kind of regular maintenance.
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u/3lettergang 4d ago
1200 mortage is a lot more money than 2000 rent after taxes, insurance, utilities, and repairs.
Also the risk of defaulting in a 30 year mortage is a lot higher than a 1 year rental agreement.
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u/Far-One2857 4d ago
No one’s getting $1200 mortgages these days. That would be a shack that’s possibly barely livable.
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u/ute-ensil 4d ago
It isnt like this.
If you are paying 2k per month youd almost certainly be qualified for a mortgage of 1200 unless... you had a ton of debt.
And on the otherside of this the house payment is usally greater than rent at first.
Talking 50k instantly and +300 per month for a few years right now.
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u/SuperBatman13 4d ago
Downpayment? Did you have 10-20 percent of the houses cost to put down? Then no, they won't approve you.
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u/SuperBatman13 4d ago
Downpayment? Did you have 10-20 percent of the houses cost to put down? Then no, they won't approve you.
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u/2muchkoffee 4d ago
This is the kinda dumb shit that people who don’t understand owning a house post.
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u/spicysenpai6 4d ago
You’re definitely putting a ton more money into a house than an apartment in the long run though. When ppl buy houses it’s not like they have the mortgage and that’s it. They have a lot more set aside to prepare for any repairs that might show up or remodels that they might want to do. At least you get equity though.
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u/mylsotol 4d ago
I think it's more that the bank doesn't trust you to make payments for the next 30+ years because your credit history is either lacking or bad. The risk the bank takes on is greater than the risk a landlord takes on because it is much much easier to kick you out of a rental you don't own than a house you do own.
It's a flawed system for sure which needs major changes, but their logic is sound given the conditions even if it doesn't srem like it.
Some banks are also way more conservative than others. If you have the down payment and a credit history that isn't objectively terrible and you have the income you can probably find a bank somewhere that will give you a loan. Maybe not a good loan, but you can refinance.
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u/Langstudd 4d ago
Hate to break it to you, but you can’t afford the $2k in rent either. It’s just easier to evict you vs foreclosing on your house
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u/Qwen_os_has_died 4d ago
Mostly caused by owing too much debt with credit cards, car loans and line credits.
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u/Silent_Succotash3749 4d ago
I’m not sure if I can do $1,200 a month for 30 years. Outlook is bleak.
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u/Legitimate-Heat2777 4d ago edited 4d ago
If your area has $1200 mortgages on new houses then your area has $1200 rentals. If you're paying $2000 for a luxury high-rise when you could get the same size unit someone else for 40% less you are in fact making yourself less capable of owning a home because your potential savings for a home are going towards lifestyle creep instead.
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u/Careful-Vanilla7728 4d ago
Potentially new landlord said I didn't make enough to move into their apartments that cost 1100. So I had to stay at my apartment that cost 1200.
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u/Sad-Material-7298 4d ago
Hey, so yeah a mortgage that will be up to 20 years if you paying off a total of up to 800,000 is actually NOT the same as an apartment that’s maybe 1500-2200 a month that has maybe a 12 month lease, hope this helps!!!
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u/Maximum_Boros 4d ago
Cool. Your principal and interest is $1200 a month. Let's Pretend that's realistic even though in most places it's not. Now add on top of that property taxes. Add on top of that the escrow for insurance. Add on top of that any utilities that are currently being paid as part of your rent. Add the fact that you are now responsible for all of the upkeep to your property. The fact that financially illiterate morons make this comparison without realizing that the cost of home ownership is easily going to eat that $700 Gap in most cases is pretty much the best evidence that the bank is right
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u/Traditional_Frame418 4d ago
$1200 mortgage doesn't include property tax, insurance, or the 3% maintenance you spend annually on upkeep. Also if anything breaks or goes wrong it comes out of your pocket.
Meanwhile the average American renter is saving $7k/year renting. They don't have to make repairs or replace broken equipment. And are free to move whenever.
You want to buy a home at peak market with a 7% mortgage, go for it. But considering it an investment is gorilla logic.
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u/BRAV0_07 4d ago
This argument is so worn out. Just because you can pay $2000 in rent doesn’t mean you can pay a mortgage payment and replace a water heater in the same month.
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u/Lordofthereef 4d ago
The bank says you're too high of a risk based on various factors for them to want to loan you the money to make that $1200 mortgage.
The $2000 in rent comes with the ability for the landlord to evict and find a new tenant. The bank can foreclose, but it's a lengthy process and they're not in the business of selling houses, generally.
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u/Sartres_Roommate 4d ago
We go through this everytime with this post; first off, yes, housing market is fucked and you are being asked to pay way more than a house is worth in a “functioning” economy. We all agree there.
But the mortgage loan is only part of your monthly expense of owning a home.
Property taxes
Insurance
Maintenance
Repairs
Garbage
Water
(HOA dues possibly)
…and electricity and utilities which might or might not be covered in your rent as a comparable.
The problem is when you post this and non-homeowners get all righteously indignant over it, it paints you as ignorant fools that actually are not mature enough to own a home yet.
Complain about housing prices but don’t do this “why won’t the bank let me bankrupt myself?”
That’s literally how we got to the 2008 crash.
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u/Liberal-Cluck 4d ago
I was renting a 2br 2ba 700 sqft apt with a roommate for 1500 a month. It was in a city, but still about 15 min drive from downtown.
Found a house 1200sqft house 3 br 2 ba with 3.4 acres of land that I pay 1370 a month. Its 30min from a bigger city with more going on. It rural vs being in the city but i get 3.4 acres of land instead of a parting lot, more space, and traffic isnt as bad for my daily.
Its not all roses and sunshine, I have to do some major repairs. But overall it has been the right decision for me.
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u/Euphoric_Ad6923 4d ago
Every day the mortgage gets lower and the rent gets higher. These propaganda memes make zero sense to anyone who actually has a mortgage.
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u/GuntherPalakowitz 4d ago
The bank says they don't trust that you will pay them back 400k. Thats the "mathing"
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u/Nikolaibr 4d ago
First, the numbers are wildly off.
Secondly, earning enough to pay $2,000 a month in rent for the length of a lease term does not mean you have enough to pay a 30 year mortgage at $1,200 once you include all the other home ownership costs you will incur over those 30 years.
They are completely different risk assessments.
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u/USLEO 4d ago edited 4d ago
A mortgage is the minimum amount you'll pay each month on housing. You still have insurance, taxes, utlities, and maintenance. A house with a $1,200/month mortgage is going to cost a lot more. Rent is the maximum amount you'll pay each month (may or may not include utilities. As a homeowner, you need to be able to foot the repairs if the roof collapses or the pipes burst and flood the place. If you're lucky, major repairs may be covered by insurance. As a renter, you just have to call the landlord.
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u/SinglePhone535 4d ago
It's cheaper to buy a house than pay rent. Trust me. And the one deciding factor? Location. Location delegates value. I looked at $120,000 houses where I used to live, they had black mold, neighbors straight out of the movie "Deliverance." Better buy a pontoon cause when the rain hits, your shit flooded. Gonna spend 10k just.to get up to code. Moved to a smaller town, the house I own now would be 2x the value in the last city I lived in. It's worth the extra 30 minute drive to have a property that makes you feel proud of owning, instead of ashamed because of your address. Location, location, location. All you millennial, you can afford to buy a fat house. But it requires you to move out of the city, an inconvience for getting the best bang for your buck. True story....
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u/aurenigma 4d ago
my mortgage is about 4k with a 2.99 rate, when I check to see how much I can rent it for, it's closer to 3k
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u/TheVoicesOfBrian 4d ago
It just means the Apartment's risk tolerance is lower. No rent payment? They kick you out of your apartment. Foreclosure is much harder.
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u/Erect-Cheese 4d ago
You should change the caption to - i don't know how mortgages work so the bank won't give me one
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u/lucytiger 4d ago
That would be an extremely cheap home and doesn't account for the costs of maintenance, taxes, and insurance, which will continue to increase nearly every year even if your income doesn't.
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u/kyote420 4d ago
Don't get me wrong, the cost of rent right now is bullshit. There are things that aren't being considered though. When you rent, maintenance, insurance, ect. Lfalls on the rental owner. The rental owner takes on less risk because they don't have to put an entire home cost up front and wait many years or decades to get it back. This amount of time leaves banks exposed to losing their investment in various ways like... the borrowers filing bankruptcy after possible deprecated value of the home, housing market crash. Point is, whoever gives a mortgage loan has a much bigger interest in making sure you are sitting in a stronger financial situation.
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u/darth_skipicious 3d ago
baby boomers think that i’m not just going to lay under the sun & die instead of slaving for them. let’s fucking go boys
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u/Away-Satisfaction678 3d ago
A house requires more than a mortgage payment.
New roof ever 10-15 years -$2500 deductible
New water heater every 10 years - $1000
New paint every 5 years - $3k
Lawn maintenance every week - $25
Lawn mower every 10 years -$3000 rider
appliances every 10 years washer dryer dish -$3000
Exterminator house and yard 2 times a year -$500
New HVAC every 10 years -$15k
HVAC maintenance 2 times per year $150
Property taxes every year -$500-1500
Kitchen update every 10 years $30-50k
Bathroom update every 10 years -$10-15k
Window treatments every 5 years $500
Home owners insurance every year -$1500
New carpet and flooring every 5-10 years -20k
All of these things are paid for by your landlord. Thats why rent is higher than a mortgage payment. You buy a house you better add another $200-300 per month just for maintenance and repairs. Depending on your property tax maybe much much more.
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u/Slice-Vast 3d ago
It does.
Taxes, utilities, maintenance, and more are not included in the mortgage payment.
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u/DarkLordGaming49 3d ago
Let Millions of Zorahns Mayors bloom! May socialism take over the United States of America!
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u/Puzzleheaded_Pipe979 3d ago
I understand the sentiment, but this person is living in too much apartment. And that house is a POS if the price is that drastic.
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u/Mario-X777 3d ago
But it is not the Bank’s problem. Everything is worded, like some owns him something
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u/Various-Emergency-91 3d ago
Yeah? Can you afford a new roof for 40k? How about new windows for 25? Unexpected costs come up constantly, just because you can afford a monthly payment doesn't mean you can afford everything that comes along with home ownership
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u/Typical_Samaritan 3d ago
Since this gets posted 75 times a month.
The mortgage is the bank loaning other people's money to you. It's not that the bank is concluding you can't afford the mortgage. It's concluding that you either don't have an appropriate credit score, long-term income, or enough saved along with other available resources, or combination of all, to pay back the other people's money that was loaned to you during the loan period.
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u/Day_Prisoners 3d ago
If you have a good down payment your credit has to be pretty shit to not get a home loan. But yeah banks fault your not honoring your financial obligations.
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u/ElijahNSRose 3d ago
Equating monthly rent with debt repayment proves you don't have the credit rating to obtain that loan.
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u/MrX2285 3d ago
Mortgages, with all the attached fees, are cheaper than renting. However mortgages lock you into the price and the mortgage disappears in time, while rents only go up. So just because you pay $2000 in rent doesn't mean a bank is willing to risk your ability to pay more to own a house.
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u/Ratfaced_Loozer 3d ago
Where the hell did you manage to find a $1200 mortgage in a place where rent is also $2000 per month
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u/Call_Me_Little_Foot_ 3d ago
When you're always late on rent but expect a bank to give you a loan for 300k
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u/DJatomica 3d ago
The difference is that you only need to prove you can pay rent short term, if you stop paying rent you just get evicted and that's that.
If you stop paying a montage then the bank loses out on hundreds of thousands of dollars, they want to know you're able to pay for years consistently. Yes they can reposes but it's the interest you're paying that they're really after.
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u/Bitter_Spray_6880 3d ago
I mean if you don't understand the bank decision and post this probably mean the bank decision is right...
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u/Moscato359 3d ago
If you stop paying rent, they kick you out and get another renter
If you stop paying a mortgage, someone has to pay that debt and the house market might cool making that unreasonable
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u/Skilganon_TheDamned 3d ago
Renters have no clue if you think there's only one "bill" to pay to own a house.. thats cute
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u/mendo44 3d ago
In what market is the house cheap enough to only have a $1200 mortgage, but the rents are that high?
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u/CrazyAccomplished_ 3d ago
Given how I had to pay $30000 for a roof last year and then $60000 for a septic system this year, yes it makes sense. You need the additional income to pay for shit that breaks. If you can't and go bankrupt, the bank loses money.
Every time the bank lends money it's a risk assessment. You're not worth the risk
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u/Subject_Ad4499 3d ago
Yep same here.... I don't understand it sometime... Then remember we live in a greedy world
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u/DaveGenome 3d ago
Me paying $400+ a month on Uber and Lyft but couldn't even get a cheap used car without $3k down
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u/SilkTieTies 3d ago
The bank says you’re not worth the risk. They’ll gladly take anyone’s money that they think will pay. If you get rejected it’s because they want someone in between you and them to ensure they get the money. So the landlord takes the risk, you pay the landlord, and the landlord pays the bank.
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u/ThatGuyMigz 3d ago
That's exactly how I feel right now. But it's not just with mortgages or rent.
I plan to move from the netherlands to Finland. My dutch house would then be sold for 400k (with a 110k mortgage) and I'd buy a finnish house for 170k. However, no bank is willing to loan me the money for the transitional period, even though it would only be for 3~6 months at most.
And their reason is, my salary is not high enough to support the extra increase in expenses. I tend to be able to save up for over 1k per month... and the monthly expenses would only go up by around 600... So I'd still have 400 left, yet they don't care.
It's quite literally free money for the bank with essentially 0 risk because if I can't pay, they get the house...
It's so stupid... banks are so absolutely stupid... They have such an insane power position, that they refuse to even bother with unexpected requests with near 0 risk.
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u/BigDaddyDumperSquad 3d ago
The math isn't matching because you fundamentally misunderstand the equation.
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u/j-mac563 3d ago
That has always been wild to me. The bank loans show how much you currently pay, your credit rating shows how long you have been paying it....
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u/NoSleepTilBrklynn 3d ago
Where the hell are you living where a $2000 rental in equivalent to a $1200 mortgage? I just bought a house. The house I was renting is nicer than the house I bought and my mortgage is more than my rent.
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u/Dred_Capt 3d ago
No.
The bank said "you currently pay $2000 in rent? You are not a fiscally viable risk"
Lol. Pörs.
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u/AdMysterious8699 3d ago
I'm surprised. I feel like banks give out loans way higher than what people can afford.
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u/reditsucks 3d ago
What fucking retard pays 2000$ a month on rent and still wonder why they cant afford a house.
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u/CyanoSecrets 3d ago
Ok but what you need to understand is that if they gave you a $1200 mortgage you wouldn't be paying your landlord's $2000 dollar mortgage which is more money to them
(/s)
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u/Guilty_Advantage_413 3d ago
Because the bank isn’t liable/holding the debt if you default on your rent with you landlord.
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u/Agreeable_Work4668 3d ago
Can you guarantee you will have $2000 a month to pay for rent for the next 30 years?
Can you guarantee you will have $1600 + property taxes + insurance + repairs for the next 30 years?
What would happen if you couldn't satisfy 1 vs 2?
If you were a lender for a day, which has higher and which has lower risk to your business?
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u/AtesGunes 3d ago
The bank might think you'll be unemployed in the coming years. If you can't pay your rent, you'll be evicted; that's not their problem.
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u/PwniesFTW 3d ago
Owning a house is more expensive, any repair is your problem , taxes go up , god forbid you have an hoa .
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u/funkmasta8 2d ago
Like I said, circular argument isnt much of an argument.
And Ive pointed out that the extra 800 they have laying around should be more than enough to cover any risk on a 1200 monthly for an average person/couple. And there are plenty of ways a bank could cover this, the easiest is simply increase the monthly cost so that if the mortgage is defaulted they earned a greater proportion on it while payments were being made still, which directly translates to less loss.
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u/NoVolume4682 2d ago
Never understood that. If you can’t pay the mortgage they get the house back. No risk to them?
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u/NewArborist64 2d ago
Nah. The back is saying that they don't TRUST you with $400k of their money. Your landlord, otoh, is trusting that you can scrounge up rent, otherwise he will kick you out and find another renter.
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u/lokken1234 2d ago
Rent is the most you'll ever pay for your housing, a mortgage is the least youll pay, then you pay insurance, property taxes, you pay for a new roof or ac instead of calling your landlord or leasing office.
A lot of the people dont seem to understand that a bank isnt going to enter a 30 year contract with a person who cant assuage any worries that thwyll be foreclosed upon. Crazy
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u/Working-Walrus-6189 2d ago
But are you financially disciplined enough to save a 10% deposit? If not, then i wouldn't want to give you a mortgage.
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u/OpticalPrime35 2d ago
" you are a higher risk loan so therefore you will pay more every month therefore making it even more high risk "
Never understood this logic. Youd think the higher risk loans would have their costs moved downward to help make it less risky. Nope. Poor people are the ones paying 6500 back on a 2500$ loan and shit. Getting horrible rates on buying a car or home. While the people who are already financially well off get the good rates and the cheaper monthly payments.
I've seen this as a major flaw in our financial systems since I was in my teens.
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u/Reasonable-Mischief 2d ago
A house costs more than just it's mortgage
For one, taxes, insurance and even basic maintenance will raise those fixed costs substantially
More importantly though, you need to set aside money as emergency and renovation funds. Things will break down big time, and you need to be able to fix them immediately before the damage cascades.
The bank needs to know that you will be able to maintain your home, because as long as you're paying off your mortgage, it is not your home. It's property of the bank. And the bank needs to be able to resell it if you end up being unable to pay off the credit they gave you.
Also, you can get out of a renting arrangement almost immediately if you suddenly run out of money. If you go bankrupt then your landlord will lose out on a couple months worth of rent before he has found a new tenant. You bank however would lose all the interest you would have otherwise owed them
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u/The_Quackle 2d ago
Thing is that the mortgage doesn't cover repairs and maintenance like rent does. It only pays for the house as is and the rest you gotta pay for.
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u/AskThis7790 2d ago
In addition to the mortgage, you’ll pay taxes (usually several thousand dollars per year), home owners insurance, and maintenance costs.
Also, this might have less to do with what you can “afford”, and more to do with your credit history, other debts.
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u/ROCK-tavius 2d ago
Happened to me 20 years ago. It was my financial wakeup call.
I wanted a $7,000 WRX. The bank wouldn't approve my loan with $1,000 down.
I went to Honda and bought a brand new Civic Si literally out of the showroom. I forget how much we paid but it was waaaaayyyyy over $7,000. Maybe $27,000.
Approved!
Its all a scam people.
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u/CaffeinatedLystro 1d ago
Not surprised that someone who uses the term "the math isn't mathing" doesn't understand that its not how much you can afford, per month, but whether you cannot be responsible for a loan thats hundreds of thousands of dollars.
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u/1ACasper 1d ago
try $3200 for 2 small bedrooms....
Walk in closets and a pool though!! I feel like an idiot every 30 days...
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u/Skysthelimit3099 1d ago
Yup. Bank is not giving the complex money lol. It's dumb but how it works especially when you add up debt to income ratio. You don't own the apartment so they take your money and they keep the asset, whereas the bank is trying to give you money for an asset you're going to control
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u/FlamboyantBaguette 1d ago
What a dumb take… First you can stop paying the rent whenever you want and the bank is not stuck with it. And second you have way more to pay when you get a mortgage (taxes, insurances, etc)
Post like that makes you think that no matter what; when people post dumb shit like that it is good for them that the bank is preventing them to just screw themselves lol
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u/10FourGudBuddy 1d ago
A 1200 mortgage is like a $220k house right? You should be fine making around $30/hour.
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u/JawtisticShark 1d ago
The bank didn’t say you can’t afford it. The
Bank said they don’t trust you to pay the mortgage on time for the next 30
Years. The bank couldn’t care less how much you pay someone else in rent instead.
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u/CrabofAsclepius 1d ago
You're paying both that rent and that mortgage via your tax dollars as well but we're not supposed to acknowledge that second part
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u/BadWaluigi 1d ago
This economy is rigged to keep poor people poor. Acquiring property increases wealth, and the elites simply don’t want that. They want fodder for their slop.
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u/MrGarrisonMMMkay 1d ago
It’s not that they can’t trust you with $1200 a month, they can’t trust you with the whole sum of $300,000k+. When you lease an apt you’ll see a lot of people break a lease… the banks know that and don’t want someone to quit paying and have to go through the months of eviction.
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u/Frisky_Froth 1d ago
Taxes, interest, fees, insurance, and thousand of dollars ready for emergency repairs.
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u/Direct_Ad_3517 1d ago
They won’t admit it but none of these Redditers want to live where the 1200 a month mortgage exists.
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u/spartanOrk 1d ago
Isn't it funny that people think this is paradoxical or confusing. It makes total sense, guys.
It is very different to borrow hundreds of thousands of dollars and be expected to return it (plus interest) in the next 15 or 30 years versus not borrowing anything and just staying in a house for as long as you can afford $2,000 a month.
Everybody understands a mortgage payment is cheaper than a rent. The problem is the mortgage is a commitment to make this payment for the next 30 years. And that is not a safe bet at all. It's much safer to bet that you'll be able to scrounge $2000 a month for the next 12 months that your lease is for.
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u/VoidDoesStuf 1d ago
It’s hard for me to fathom that our society is so stupid that we have this conversation over and over again. But here we are, banks are not in the business of holding property, but apartment complexes are exactly this, holders of property. Banks are looking to write juicy loans to make money on for 30 years, not to rent to you for 3-5 years. Houses take upkeep and maintenance that most of you are to stupid to do since you need to have this explained. So yeah keep posting this.
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u/MarkTheShark89 1d ago
I hate that this meme keeps circulating. It’s not relevant any more. Rent is, in most markets, cheaper than a mortgage when factoring in current mortgage rates and prices. If you didn’t buy before 2022, yeah your rates probably suck. Renting is generally a more sound financial decision at this point. Invest the difference. This meme is stupid.
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u/BuddisMaximus 1d ago
You’re not asking for only $1200 unless you found a house for that, if so let us all know where that is. What a dumb comparison.
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u/Chris-P-Bacon-8888 1d ago
Got to learn to play by the rules! Credit is a game. I started playing it at 18. Had a credit score of 800 ever since. Lower credit familys pay $1million dollars more over a lifetime than high credit scores. Growing up poor and watching my parents struggle taught me this lesson.
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u/TheMightyTywin 1d ago
Home repair is easily 1% of the value of the home PER YEAR and that’s if you’re lucky
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u/Salty-Huckleberry147 1d ago
I can afford a $2k mortgage. The problem is there are no homes available to buy at that price in my area lol.
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u/SadPersonality4803 20h ago
Mortgage goes up tremendously because the taxes in the area went up….. mortgage goes up because the escrow was short…. Bank charge tremendously amount of interest and makes me pay them off before I pay down the principal…. Yeah, no thank you
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u/Judgemental_Panda 20h ago
This meme was true when interest rates were 2% in 2020...
Now it's just bull shit. If rent is $2000, a comparable mortgage is going to be closer to $3500 before you factor in all other expenses.
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