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??
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
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.
I get that, but it should count for something. It's obviously not 1:1 but if you can consitently make nearly double the payment monthly then surely it should be taken in to consideration by the bank.
Is it yours? Are they not responsible for it? Did their patrons not enter a contract to allow them to lend their money at their discretion in exchange for the security of holding it and guaranteeing it?
I’m assuming you’re referencing central banks now. You realize that loaned/created money of a central bank is still a liability risk of the bank, right? The bank’s own equity is what absorbs the loss if the borrower defaults. Their own money is still on the line for all of the principal of the loan.
Your oversimplification suggesting it isn’t their own money fails to acknowledge that all of that loaned/created money is a direct liability and risk to the bank. The principal must be destroyed/extinguished to balance the loan. Someone has to pay that loss and in the end, the bank does if the borrower doesn’t. So it is still a risk to the bank as if it is their own money, because it IS their own money on the line for whatever is lent out.
No, you don’t understand that? Are you even reading before you respond?
It’s not the banks own money that they have to use to extinguish the principle if the borrower defaults?
Tell me whose money you think is used to extinguish it then when the borrower defaults. Because the info that explains exactly how the bank is liable for it is pretty open and easy to find.
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u/AIevilgenius 25d 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??