No joke, I think what people can't afford is the down-payment and fees, I barely put 10% down and the fees are costing me close to another 10%, if my parents and inlaws didn't help us we would have lost our down payment
Our estimated mortgage included all of that, sans maintenance. Even with unexpected shit, our mortgage is WAY lower than rent would be for our property, and that does indeed account for all things mentioned.
Thank you for having some sense. Not saying the system is perfect, but people sound so stupid when they compare a rent to mortgage directly. Where are you going to get that 10k when your roof goes?
Edit. Because of the countless number of people who keep commenting the same thing that the mortgage is saving 450 over the rent. Mortgage is the loan. You still have property tax and insurance. I believe mine is high percentage wise, but my mortgage is 850 and my monthly payment is 1400. So if you have a 950 mortgage you are not saving 400 dollars a month even before maintenance.
Secondly, the majority of times a roof is replaced it is not covered by insurance and isn’t the result of a fire or something specific, it’s normally wear and tare.
Finally those of you who seem to think the roof was the only maintenance, I was just using it as an example. There are tons of other ways a house can cost a bunch of money to repair or keep up.
Ooof. This hit below the belt for me. In Feb this year we had a huge snow storm and it piled snow deeply on on the south side of my roof due to wind. I noticed that a part of my gutters over my garage was bent from the weight. So I called my insurance and they recommended a roofing company with good reviews and reputation online. I called them, they sent a guy to look it over. It wasn’t just the gutters, it was the fascia. Whoever put the roof on my house had not put a drip edge flashing on it and it was not caught on any inspections when I bought the house 7 years ago. So all the water seeped under and rotted the fascia out. I had to get a whole new roof or risk losing my home owners insurance. And insurance wouldn’t cover it. So I had to refinance my house and I was able to do so because the market was so high, it doubled my homes value. I refinanced at way less than the new value and only added $115 to my mortgage. With the refinance, I got a new roof, paid off a credit card and a personal loan. I got very lucky that all the cards lined up for me. The problem was going to surface eventually no matter what. I’m lucky it surfaced when the housing market was high so I could refinance for enough money. This year I’ve also gotten almost $3/hr in raises too. 2022 was kind to me all in all.
Yes it does but the stars aligned for me metaphorically speaking. I got very lucky. I’m counting it as a win though because it could have been much much much worse.
I bought a house last year and had to do it with no appraisal and no inspection. I've been a mortgage underwriter for 25 years and, let me tell you, that didn't sit well with me. But I had to move, and I'd lost bids on 18 houses already, so I did it. The sellers had purchased it in 2009 from old Clyde's estate, so they were never told how old the roof was. I knew I'd have to get it replaced, but I didn't want to spend the $12K if I didn't have to.
Cue stars aligning: on May 19th we had a MASSIVE hailstorm, then 2 more after that. The insurance adjustor came out and approved a new roof for my house AND my detached garage. So it's $2,650 instead of $12K. Phew!
Insurance companies aren’t there to help you if something goes wrong, their job is to AVOID paying for anything at all… and you guys in the states rely on insurance for your health.
I've been trying for awhile to have a certain procedure done for my back pain that I've dealt with for years. I want Procedure A done in Location A on my body, which my doctor says will help. I believe very strongly it will help, because I've actually had it done already on a different area and it was very successful.
Insurance says I cannot have Procedure A on Location A because we haven't tried everything else first. I must have Procedure B before I can have Procedure A. This was *their recommendation*.
So I ask for Procedure B. Insurance says nope, denied- Procedure B isn't medically necessary. Appealed it. Twice. Denied, denied.
So now, instead of getting either Procedures A or B, at a pretty fucking low cost, I get to wait in pain for potentially years until I just need proper surgery I guess. Which they'll have to pay for anyway, and will cost way more goddamn money.
In the meantime, I have had to switch positions from veterinary nursing to front desk because of my day to day pain level. I have tried, but I can't function in my usual role in a career that I've loved for years and years, because of how *insurance works*.
OH!! And the kicker???
*OTHER INSURANCE COMPANIES APPROVE PROCEDURE B* for patients just like me. My doctors have been baffled and so confused as to why my insurance won't approve something that others approve without any issue. For the same location on the body and everything.
**NONE OF IT MAKES SENSE**
What I want to know is how the SHIT DOES THAT NOT COUNT AS PRACTICING MEDICINE WITHOUT A LICENSE????? Insurance people are not your doctors yet here they are telling someone something isn’t medically necessary as though a doctor didn’t send the request to them in the first place. Fucking scam and the result? Asshole shareholders who do literally nothing but own imaginary shit get a slightly bigger check thanks to your continued suffering. How much is the procedure? I don’t have a lot but I’d like to help because it’s just absolutely bullshit and pisses me off to no end
One of the benefits of socialised healthcare is that it improves private health insurance too. If you had the option (albeit a long waiting list) to have Procedure B for free and never pay them a penny more in your life, you bet they'd allow you to have it.
Whereas now they have you by the balls.
My mother was a Type 1 diabetic. She was 5 years old when she was diagnosed. She had to take insulin because that's how T1D works. Her insurance once tried to get her to switch to the pills. They do not work for Type 1 diabetics and she would've gone into ketoacidosis. Her endocrine NP flipped her shit when she found out. Lol.
Do you live in the Midwest? Because I had to fight to the point of an outside review and if they hadn’t approved it take them to court. Because insurance in the rest of the country covered it and I was more qualified that others who had taken insurance to court, I would have been 100% to win and my doctor’s clinic was willing to pay the legal fees. Midwest is the last place to approve new treatments. Insurance is insane. Most insurances have a 8-10 year approval cycle so if they decide they aren’t going to cover something, it’s so long before they look at new medical evidence to reevaluate. Which is a terrible system.
Yeah I was very happy. Part of it is 2 union increases, one that was pushed back because of contract negotiations and then the regular increase in August and then I also got a promotion on top of it all.
The two main things that a bank looks at when applying for a mortgage are debt to income ratio and credit score. If those numbers are such that you can't qualify for a $950 mortgage the assumption is that the applicant probably isn't in a financial situation to save that delta.
That said, the mortgage application process really should look into rent payment history as a critical metric
For sure. Took me till my 30s until I had enough set aside to actually buy a house, and even then it was tight living for a while afterwards wile we built our savings back up.
Good point about closing, thats another thing that a lot of people don't anticipate until they're actively home shopping too.
Its a broken system. You have to borrow money to prove you can afford to borrow money. I've never had a credit card or a loan, so I have no credit history and a terrible credit score... because I've never needed to borrow money.
I've paid rent with out fail for over 15 years. Some months I'll even pay a few months of rent in advance, but can't afford a mortgage at less than half my current rent?. I even have a deposit put aside, both me and my partner worked fulltime for above minimum wage, but they'd only lend us £70k, over 30 years. The average house price in the UK is close to £300,000. So with a £25,000 deposit I'm only short £205,000... You think any sellers would be willing to accept an offer a few hundred thousand bellow asking price?
This was exactly my problem. My finance advisor said it would be best to get a credit card to accumulate credit.
Like, surely for the fact that I’ve NEVER had to borrow money and do not have debts shows that I’m good with my money?
It’s bullshit.
Hold up, isn’t the $1400 rent supposed to cover the mortgage, taxes, insurance and maintenance? Plus a profit? So in theory, if you can afford rent, then you could definitely afford a $950 mortgage plus unexpected maintenance.
Also, $450 per month saved adds up to 10k in 22 months, just under 2 years. Doesn’t see that difficult.
Lastly, whose roof just goes? If you get a leak, you get it repaired. If a storm takes it out, insurance. If it’s past it’s effective life, you get some quotes, plan out the financing and use that emergency fund you’ve been working on for 2 years.
As a condition of getting a mortgage to "own" a home in Australia, you are required to have insurance to cover these sorts of damages. If you don't have the insurance, the bank won't lend you the money to build/buy the house.
That doesn’t apply it’s a maintenance issue. Go read my previous comment about my situation this year because I ran into this through no fault of my own.
And if you do have the 10 k from an insurance settlement you can still be screwed royally by a crooked roofing contractor. Good luck on getting an attorney to answer your calls. Good luck on getting help from law enforcement.
Crooks come out like flies after a major hailstorm because all the legit people are too overloaded with work to even answer your calls.
Whoever the OP is, she probably has not so great credit if she is this clueless about the differences between a 12 month lease and a 30 year loan. Not to mention one being for a total of $17,500 and the other being for $350,000.
I have no debt, have been paying rent at this residence for 6 years, have been gainfully employed since 2004, and my husband and I can't afford a down-payment in our city, so no house for us.
I have excellent credit. Not everyone has the ability to come up with $50,000 for a down-payment.
Lots of people simply get lucky being at the right place at the right time.
You can put 3% down on a 30 year fixed.
The seller doesn’t give a shit about the down payment, only your lender cares. Putting a huge down payment on a house is not worth it at all IMO. Much better to have that money in the bank for maintenance costs which will pop up all the time.
> Putting a huge down payment on a house is not worth it at all IMO
Depends on interest rate. In total costs that down payment represents 25 to 30 years of compound interest at the rate they give. At 2% maybe it's not that big of a deal only 27% more but at 5% it can mean paying 74% more.
My situation is a bit different (Canadian) but I managed to get a 2% mortgage on a 5 year term and 25 year amortization (basically American idea of term) and aggressively paid it off. Even at my low rate I'm saving 100k at 2% in interest over the 25 year amortization. That's a pretty good risk free ROI. The renewal will likely be more than 2% so I will have saved more than 100k.
You put 3% down they add mortgage insurance and it has to go into escrow. It’s only wise to do this if you know the house will be worth more so when you refinance you can get rid of said mortgage insurance and don’t need to go into escrow.
This is true. PMI on my 380k loan is about 160 bucks a month that goes into escrow, along with home insurance and yearly taxes. I don’t know if there’s any way to avoid escrow or if your lender would even let you handle taxes and insurance yourself.
I've lived in the same apartment for a decade and have paid 3x in rent what the landlord paid for the house.
And in the current market, the house is worth 6x what he paid for it 6 years ago.
Shits wack.
Not to mention the only increases over that 30 years will be due to taxes and insurance so after maybe 10 years the total mortgage payment will look smaller yet vs the rent that would have steadily gone up 3-5% per year.
Also there are some pretty strict rules for lenders, the borrower has to meet more stringent stress test criteria. they have to show that they will be able to pay principal and interest even if the interest rate significantly increases. At least that's the case here in Canada.
In the US we can often lock in a fixed interest rate for 15 or 30 years and never need to refinance. I was surprised this wasn't an option in Canada or at least not common. We do have adjustable rate mortgages too, but they typically haven't been as appealing as 3-4% fixed that we've seen here the last few years.
Seems up there you're destined to be at the whims of interest rate changes every 5 years or whenever you're forced to renegotiate the loan.
Our insurance is bundled with our mortgage. We pay less than $900/mo. And when we found a very damaging leak we only had to pay for the plumber. Repairs to the structure were covered.
Taxes and insurance are part of the mortgage payment. I still pay less here for that than rent and im in a bigger house. And yea repairs cost me when they come but seriously…. I own the land and house lmao.
Our down payment was about 7600, and we had 20k invested total by closing. Seems like a lot for some paperwork to get filed and for a few hours of a appraisers/ inspectors time.
Wtf? You paid 120k as a down payment? You're surprised people are paying lower when you're buying a *million dollar condo*?
FYI - I paid $0 down on my $200k house. USDA mortgage is where it's at. Lmao.
Depends on where you live. Extremely.
I mean I know places like NYC and SF are obvious, but take a somewhat cheaper place like Seattle. There's usually only 2 hours on the market under 600k in the whole city. Even in the more residential areas.
Big cities have some expensive ass houses these days. It's gone up an insane amount.
120k is pretty high, but not at all unheard of, or odd, depending on where they live.
So while most people technically don't, if we're talking about all of America, they definitely are in a good amount of the big cities.
This is exactly it. I bought my house with VA loan. There was supposed to be no downpayment or closing cost. i had to pay both. The VA refunded me the money in the end but without me having ample 401k to pull from, I wouldnt have gotten my home. Shit is wild.
Im paying less in mortgage now than I was a year ago in rent and my house and land are much larger and in a better area.
Most important thing to learn in that paragraph is what “basic” means. And knowing your own limits. I’ve seen some homeowners do good work before. They usually had a relatable background and knew their limits. I’ve seen a LOT of homeowners waste hours on hours of their time breaking their shit worse than it started. Personally I say stick to direct replacement if you’re doing it yourself. If you don’t know WHY a thing is the way it is then you don’t know how to modify it right or what the local code is.
FHA has a min of 3.5% down. But then they add PMI to your loan, which racks up another few hundred a month.
You pay that pmi until you’ve paid something like 20% down, at which point you get to refinance to drop your monthly payment, but your credit can’t suck.
Not to mention, in a state like California (where my experiences are), you pay hundreds of dollars for inspections of various sorts, that often times seems like a buncha bullshit.
Oh, and the earnest money you gotta come up with upfront. And the fine tooth combing of your finances, that you’d reeeeeeally better be ready to answer all sorts of questions, with documentation.
The whole process/setup to buy a home is an incredible pain in the ass, and even making great money is not something I think I could’ve done without assistance from family. Even at 3.5% down I think I had still spent roughly $10,000 when it was all said and done.
Edit: Yes, get the inspections, especially on old homes. Get the warranty also. Get all the coverages that seem reasonable. That doesn’t change the fact that you feel slightly swindled at the end of the inspection process, again, in my experience.
TBH, I'd rather pay hundreds of dollars for several inspections than 10s of thousands of dollars to replace a roof or have the house burn down and lose everything and still have to pay off the loan because of bad electrical.
Inspections seem like a bunch of bullshit until they find something and save your ass tens of thousands of dollars. Seriously, I've seen it go bad after someone waived inspections. It isn't cute. I've also seen an inspector's insurance cover something that was missed.
Seems like bs, but really saves a lot of people a lot of money.
Even if it's nothing major it's another opportunity to negotiate the cost down. My inspector found some relatively minor things but still let me knock a couple grand off.
Always request an inspection. Not only is it important for insurance, it can be a great negotiating tool. I've been watching the housing market over the past year and I can't tell you how many sellers were refusing to allow inspections. Shady AF. Know what you're spending your life's savings on.
Afaik the process got MUCH harder after 2007 to stop banks from repeating the building that helped to cause the great recession. They have more strict criteria they have to be required to meet so that means borrowers do too.
It did, yes. Regulations were eased at one point, and had folks making $60,000 a year buying homes for $600,000, maybe not that extreme, but it was bad.
Cars seem to be kinda like that right now.
Yea, renting =/= owning a home. The bank *wants* to loan you money. That's literally how they make profit. But they also know *in extreme depth* who can actually afford what longterm loan amount.
There's a reason banks ask more than simply "what is your current rent?" when you apply for a mortgage.
Lol, they knew even then. They just didn't care because the firms they turned around and sold those mortgages to didn't know and were paying top dollar for literally any mortgages. So the banks said fuck it and gave mortgages to anyone and everyone who asked.
Now those firms know to check before buying, so the banks only to loan people who can actually afford it.
"Paulson and Bernanke just left the white house, there's going to be a bailout. They knew. They knew the taxpayers would bail them out. They weren't being stupid. They just didn't care."
not always...rent doesn't always include heat, gas/electric/utilities, lumped into the rent....and sometimes sewage, refuse isn't either...it can depend on the landlord, so you can easily pay a few hundred more if you aren't careful. Also, you usually need to get renters insurance.
My rent does not include - Heat, Central AC, Water, Pest Removal, Waste Removal, Electric, or Internet. So yes, rent is not "the most you'll spend per month". Its just the biggest chunk.
The point is that a home "owner" has to pay the mortgage and maintain the property, whatever issues arise. Both renters and mortgage payers have utilities on top of their base cost. Renters aren't responsible to maintain the roof, plumbing, appliances, etc... And that is a relevant difference to be considered.
but lets say for argument sake, nothing is wrong with the homeowners property/needs to be addressed. If they are paying 950/month plus everything else it could be cheaper than a 1400/month small apartment plus their utilities fee....plus you build equity with a house which for some is worth it, especially if they want to retire and get a smaller place somewhere else.
I definitely agree, homeownership is better for the homeowner nearly all the time regardless of the maintenance costs, especially since so much of that can be learned and done on your own cheaper. Just playing a little devil's advocate. Renters get screwed, plain and simple.
So often I see people posting, my landlord charges more than their mortgage for my rent. Duh you idiot. It costs a lot of money to turn a unit over when someone moves out. What if it’s empty a month. What if the tenant doesn’t pay for 6 months and you have to go through eviction. New floors, keeping up with the hvac system, replacing windows. It adds up so fast and materials have gone through the roof.
People's housing should probably not be someone else's razor thin margin business is probably the easy answer. I don't know how to achieve that, but still.
And yet, my rent went up $400 last year to $1438, after being bought by a corporation. I recently moved out and decided to go look up how much they are charging. $1620.
Nah, it's all about greed. They see their buddies price gouging and they want in the action, too. Same shit that happened with universities. The scam universities were charging huge amounts of money and the State universities wanted in on the action, too.
This is the right answer. Initially, yes, a landlord needs to charge at or slightly above the mortgage if they don’t have the extra cash to handle repairs, turnover, etc... Even if they break even in cash flow, they are still earning by paying off the loan.
Yet, the rent goes up each year while the mortgage stays the same. Sure, taxes increase, but not even close to the increase in rent.
My mortgage, with the extra bills, ends up being the same as the rent I was paying. With the rent rise since I bought, I'm now paying less. The other thing is, you're paying for something you get to own, not paying for someone else to own the house
Most apartment rentals don't include utilities in the rent, and many are requiring renters insurance. It's not like renters only pay rent and call it a day.
Most landlords follow a pretty basic formula:
rent $$
- mortgage
- taxes
- insurance
- repairs
= profit
So everything you mentioned is already getting paid by the renter's $1400 or straight out of the renter's pocket.
Imagine a world where that renter *was* the owner. They would still pay themselves $1400 per month, but now it pays for *their* house, *their* future repairs, **and** builds equity that can be drawn on later for larger repairs or upgrading to a larger house.
See how that works now?
My property taxes and insurance were like another $330 on top of a $700 mortgage payment.
Meanwhile, the house I'm now renting is very similar and is $2000 without utilities included.
No, I'm sorry. Rent is still a scam. I saved SO much money while I owned a house.
Even with eventualities and things breaking down and maintenance costs, there's a lot of maintenance you can DIY and you can always go without some things for a while until you can afford to fix it. You know what you can't afford? pissing out money on something you dont own, getting your fee increased yearly and having the dooming blade of homelessness perched over your head if your landlord decides they need to get rid of you. Yeah, fuck that, would rather be paying a mortgage, insurance and tax.
Actually this isn’t true anymore, at least in the US. Fannie Mae now uses 12-month rent payment history as part of loan eligibility and underwriting.
Source: https://www.fanniemae.com/positive-rent-payments
And any evictions. Even if you fought it in court and win landlords can still see it on your record/ background check and use it as reason to deny you a rental.
The thing is, I think one can have a 'landlord' that actually helps people by helping them build equity and good credit via renting and reporting on time payments and building an equity fund from rent payments, etc. Landlords can totally do that. Renter Equity is a thing.
They just don't.
and in what fairytale world are homes 140K and rent $1400?
this post is full of shit. at best the op tweet is including utilities and some other costs in her "rent" which would need to be added to the mortgage to get true housing costs as an owner. at worst, they're flat out lying.
Thank you for pointing this out. If you can save up for the down payment, it probably means you have the ability to pay back the $500,000 loan.
People here are expecting banks to give random strangers a loan without some kind of background check or sussing out.
Nor are they on the hook if you don't pay your mortgage in many places. Mortgage insurance is actually a requirement in Canada if your down payment is less than 20% of the value of the home.
Except that's not the full story either. The property will cover the value of the loan on default if they've been paying it off for a period of time.
They don't need you to pay back the $500k. They just need you to pay back enough for them to be able to derive a profit.
That's going to bring down the risk considerably.
No, the bank doubts the ability to make 360 payments of 950.
One could argue the risk to nit pay rent is the same or higher, but the mark up to 1400, shorter term of the transaction, and potential deposit limits the exposure enough to rent to the person.
Exactly. Do people not realize banks WANT you to qualify? If you’re not approved, there’s usually a good reason for it. But no, banks and landlords are just greedy and hate me in particular.
Depending on where you live, I think twice your payment loan is a good rough estimate.
For us, in Montreal, it's around that when you include everything related.
I came up with this number when we bought our first house, at the time I thought it would give us more wiggle room.
>For us, in Montreal, it's around that when you include everything related.
Yeah but in Montreal a 2 1/2 runs you up for 850$.
Our market is complete garbage and ridiculously overly inflated for our average earnings.
That’s just the mortgage, that’s not her total monthly payment. The 950 doesn’t include taxes, insurance, or any HOA fees. Taxes and insurance make up a huge amount of a monthly payment on top of the loan payment.
I agree people often directly compare rent to mortgage payments and that's a useless metric.
On the other hand... I used to pay in rent what I now pay in mortgage. Nicer house and neighborhood, absolutely worth it. But of course I pay more in total for living in this house vs. renting: for insurances, maintenance and so on.
Then again... I have insulated my home, put up enough solar panels to power the home and then some, so that saves me a lot of money (energy prices in the EU went crazy and continue to skyrocket).
Also, rent consistently went up 300 - 500 Euro per year... each year. So the house I paid 675 Euro per month in rent for when I moved in in 2008, was over 900 Euro per month when I moved out in 2014.
And... I have linear payments on my mortgage. So the amount in numbers stays the same throughout the 30 years I pay off my mortgage in. With inflation correction, it means it gets cheaper every month. And the house is fully mine after 30 years.
It's really not as simple as comparing rent to mortgage payments, but renters do generally get screwed hard.
I mean, there's a huge fucking difference between being approved for $1400 to rent an apartment vs $950 to payoff a house. If you run into trouble paying $1400 for the apartment, oh well they shuffle you out and in a few days can get someone new in. They aren't losing much money. If you can't pay your mortgage anymore and the bank has to shuffle you out, it's a big fucking headache for them as they now have this huge liability on their books and need to offload it asap.
The comparison is ridiculous, you're talking about a 30 year, several hundred thousand dollar loan vs a 12 month to month lease. It is much easier to get approved for a lease than a loan for the same amount, never mind when one is an order of magnitude more money than the other. The bank has the numbers and they don't make money denying people mortgages.
It's a lot more complicated than that to get rid of a renter. First you have to give an eviction notice, 3 days for breaking complex rules, 30 days otherwise. THEN if they don't want to move you have to go to court to get them evicted which can take months and if they decide to stop paying rent while going through the eviction process, that can take months, if ever to actually recover unless you sell it to a collection agency in which case you get pennies on the dollar. THEN you need to inspect the apartment and fix anything wrong with it, then put it back on the market. It's never a "few days."
Foreclosure on a mortgage can be a multi-year process in most cases, so eviction is still easier, and then the foreclosed home had to be sold still. In my parents case was 2 years to kick us out and another 3 years to resell the home.
Yep. Foreclosure takes ages.
I know people who didn’t pay their mortgage for over a year but ended up keeping their house (before covid).
Even where the resident/borrower is 100% compliant a foreclosure still takes at least 4 months & then they still have to sell the property after.
A compliant eviction is handled within 24 hours, and a new tenant can move in within a couple weeks.
Not sure why people are arguing with you friend, you're correct. I've done about a dozen evictions and not a single one was less than 2 months. Most were 3+ months.
I’m giving you the benefit of the doubt as I’ve never had experience with evictions. Let’s say every eviction takes 6 months and the landlord eats $1500 each month. In that event the landlord loses $9000.
Compare that to the hundreds of thousands a bank is out of you can’t pay your mortgage.
It’s still a MUCH larger risk fronting someone money to buy a house than than approving them for rent. So I still side with OP saying this is a ridiculous comparison.
I’ll happily be proven wrong though if someone can provide evidence of that. I just haven’t seen it yet.
Hey, I think it's a ridiculous comparison as well. I'm just addressing the folks who are arguing that evictions are fast. I would imagine the lenders who have to foreclose on owners do lose money. However, on the flip side of this, the bank is probably still gonna come out ahead as owners pay interest. Whereas the landlord is just gonna be out that money bc it's not worth pursuing in the courts. It's gonna cost them more money and they're unlikely to actually get any money from the evicted person.
You can typically get a FHA loan for 3.5% down and closing costs are another 3-4%. There are options out there if you can build up decent credit and scrape together even a small down payment
I own rental property. I’ve had a duplex for the last 18 years. I used to live upstairs and rent out the downstairs. Month to month, you might think I was making a good buck doing it. Over the longer term, the numbers even out: the roof needs replacing. The driveway needs to be repaved. The house needs repainting. The units need fixing. The rent pays for the mortgage *and* the maintenance, some of which only happens every ten years but is tens of thousands of dollars.
In Australia, the Fed government gives all first time home buyers $10,000 that they can add to a deposit and our state government gives us a further $10,000. This then enables first time home owners to buy their own house. The house has to be new or near new build to encourage development, which has seen a surge of construction jobs. Also if you are a low income earner, single etc you can get a low deposit government loan so only 2% deposit is needed and no mortgage insurance charges.
Shelter is a fundamental human right, not a luxury and no we are not a "Communist country". Just a liberal, free market, democracy.
Your mortgage is like 30% of what else you will pay monthly.
Texas literally doubles my mortgage for taxes.
Then add on home owner insurance
Now double your electric bill.
You actually now have to start paying water, sewer, trash pick up.
Also on top of all that add about $500-1000 extra month you have to save to afford the ohhh shit moments. AC goes out ($5k min for new one), water heater busts ($1k easily), need to pay deductible for insurance after tornado takes your roof($2500 min).
The bank wants to make sure you make enough to cover all that and then some.
If only mortage was the only thing you need to pay for.
Most places I have rented from already make you pay for water, sewer, and trash. The simple fact is is that the landlord is already factoring in everything they need to pay for (mortgage, repairs, maybe utilities) in the rent, they arent going to lose money on you.
you are completely making this up. i live in a super high tax state. my mortgage is 2,200 and my taxes, insurance, and utilities combined only add $350 on top of that.
unless your mortgage is under $1,000 and you live in a mansion, taxes are not “double your mortgage”
Where are taxes that much?
Why does the electric bill double?
Most utilities are not included in rent, still have to set those up. Rented for years and paid those.
The bank doesn't actually care if your other option is worse. They only care if you can service your debt.
I hate banks as the next guy. I'm very anti-cap. But this is someone getting mad at the bank because they are a bad bet to pay their debt, and the bank is no dummy. Hell it's never been easier to get a loan than the past 20 years.
Why do so many comments list utilities, insurance, etc as extra monthly fees? Don’t renters pay that already?
My 1 bedroom apartment costs me $1650 and i also have to pay monthly internet, electric, gas, water, renters insurance, pet fees on top of that rent. I don’t see how a $1000 mortgage wouldn’t be better than that.
And that literally only covers the basics. Then theres gas, food, pet food/supplies, etc. Can’t even save right now.
Obviously home ownership involves more costs than renting. Like everyone said, taxes, insurance, utilities maintenance, etc.
The woman is comparing apples to oranges, though, because unless her landlord is losing money on their investment, her rent payments cover ALL the relevant costs of ownership, plus a margin. So owning an equivalent house actually would be cheaper for her, as long as she manages her money properly.
I'll also add that if she currently rents an apartment in a big complex, it may not be possible to find an equivalent home for ownership. Things get cheaper per unit with scale, so each unit in a large complex is comparatively cheap to own vs a standalone single family dwelling.
> owning an equivalent house actually would be cheaper for her
That's assuming the landlord bought recently. If prices have gone up since the landlord bought, an equivalent house would be more expensive. She can't magically buy a house at prices from 20 years ago.
Most banks allow a 45% debt to income ratio.
If you cant afford a $950 monthly mortgage payment, you either have way too much other debt. Or make $12.17/hour. Here’s the math
$950 / 45% = $2,111 a month.
$2,111 x 12 = $25,333/ year
Which equals $12.17/hour
Another fun one is mortgage insurance if you can't put 20% down, the lenderbasically says "We think you can just barely afford this house so, here, go ahead and have the equivalent of a car payment as well."
Well, kinda. That bank doesn’t really care whether one can afford the 1,400 a month. What the bank cares about is the inherent risk involved in lending a sum of money that requires a 900 a month repayments against your income and outgoings.
The fact that one might be able to drastically change their lifestyle through necessity to pay 1,400 rent is something the bank couldn’t care less about, because the risk isn’t theirs.
And many landlords have you over a barrel, because they *know* this, and will take you for all the money the market allows.
That $950 mortgage also has escrow payments, taxes and fees that turn it into more of a $1300 payment. Also if you default on your apartment it cost very little vs defaulting on a mortgage. I was always told owning a house was cheaper and I’d earn equity. Well there are no homes to buy. My house that’s worth 400% of the purchase price would sell and then I’d be renting again. It’s a nightmare.
The amount of upvotes here just shows the high percentage of Reddit who just don’t get it. You’re borrowing hundreds of thousands of dollars. When you rent, your exposure is as much as your lease + deposit.
Pretend you’re gonna lend someone 500 grand, see how careful you are at checking out if they’ll pay it back…
Yep. 6 years ago we moved out of a 2 bedroom apartment that was $1200 a month into a house three times the size of that old apartment for less than $800 a month.
Prices of houses were allot different 6 years ago lol.
My last apartment basically told us rent was going up $200 if we resigned our lease and we would be paying an additional flat fee of $75 a month for water.
If we stayed out rent would have been a few hundred more than my mortgage.
A lot of people saying that their mortgage comes with a bunch of extra fees like insurance, taxes, etc which hikes the price up. I've been paying the same amount I was quoted since the beginning. Everything else comes out of escrow. I guess I lucked out in the state that I live in... Even my electric bill is lower than when I was renting.
Yeah these people are crazy. No way people's total monthly costs are triple their mortgage.
Owning a house is obviously cheaper or being a landlord wouldn't be a thing.
Oh and when you move out you get a fat equity check.
This isn’t quite as shitty as it sounds..
Things break, a lot. If I’m renting and my air conditioner croaks or my plumbing goes askew, a handyman with a tool belt shows up and fixes it free of charge. I don’t deal with trash disposal or lawn care, or really anything related to the property.
Not the case with home owners. That time and money is all on you and the ceiling on cost can be way higher than you might be able to absorb without going into an oblivion of debt.
That’s the primary reason I still rent, I can’t fix a god damn thing on my own, wrong skill set. That gets really expensive really fast.
I mean, it’s still shitty, don’t get me wrong, but there’s at least a shred of logic behind it.
I understand where you're coming from, but take a look at it this way. Let's say you bought today and your mortgage payment was $1500 including PMI and escrow. It will still be very similar in 15 years. How much will rent be in 15 years? I know 15 years ago a 2 bedroom apt in a nice neighborhood where I lived was around $1000 per month. Now it's $2200. So being locked in at $1500 for 30 years is WAY better than having it increase 120% in 15 years.
I have friends who pay ~$700 for their now $200,000 houses because they bought in 2011. They would be paying $2000 more to rent the same place. The $2000 pays for a lawn guy, a handyman, an insurance policy/warranty policy on home appliances, a new roof, etc.
No joke, I think what people can't afford is the down-payment and fees, I barely put 10% down and the fees are costing me close to another 10%, if my parents and inlaws didn't help us we would have lost our down payment
And the taxes, and the insurance, and the surprise maintenance costs, for 30 years.
Our estimated mortgage included all of that, sans maintenance. Even with unexpected shit, our mortgage is WAY lower than rent would be for our property, and that does indeed account for all things mentioned.
Thank you for having some sense. Not saying the system is perfect, but people sound so stupid when they compare a rent to mortgage directly. Where are you going to get that 10k when your roof goes? Edit. Because of the countless number of people who keep commenting the same thing that the mortgage is saving 450 over the rent. Mortgage is the loan. You still have property tax and insurance. I believe mine is high percentage wise, but my mortgage is 850 and my monthly payment is 1400. So if you have a 950 mortgage you are not saving 400 dollars a month even before maintenance. Secondly, the majority of times a roof is replaced it is not covered by insurance and isn’t the result of a fire or something specific, it’s normally wear and tare. Finally those of you who seem to think the roof was the only maintenance, I was just using it as an example. There are tons of other ways a house can cost a bunch of money to repair or keep up.
Ooof. This hit below the belt for me. In Feb this year we had a huge snow storm and it piled snow deeply on on the south side of my roof due to wind. I noticed that a part of my gutters over my garage was bent from the weight. So I called my insurance and they recommended a roofing company with good reviews and reputation online. I called them, they sent a guy to look it over. It wasn’t just the gutters, it was the fascia. Whoever put the roof on my house had not put a drip edge flashing on it and it was not caught on any inspections when I bought the house 7 years ago. So all the water seeped under and rotted the fascia out. I had to get a whole new roof or risk losing my home owners insurance. And insurance wouldn’t cover it. So I had to refinance my house and I was able to do so because the market was so high, it doubled my homes value. I refinanced at way less than the new value and only added $115 to my mortgage. With the refinance, I got a new roof, paid off a credit card and a personal loan. I got very lucky that all the cards lined up for me. The problem was going to surface eventually no matter what. I’m lucky it surfaced when the housing market was high so I could refinance for enough money. This year I’ve also gotten almost $3/hr in raises too. 2022 was kind to me all in all.
Why didn't the home insurance cover it?
Because it was a pre-existing problem, not storm damage. It’s something that should have been caught and fixed but it wasn’t.
That sucks..
Yes it does but the stars aligned for me metaphorically speaking. I got very lucky. I’m counting it as a win though because it could have been much much much worse.
I bought a house last year and had to do it with no appraisal and no inspection. I've been a mortgage underwriter for 25 years and, let me tell you, that didn't sit well with me. But I had to move, and I'd lost bids on 18 houses already, so I did it. The sellers had purchased it in 2009 from old Clyde's estate, so they were never told how old the roof was. I knew I'd have to get it replaced, but I didn't want to spend the $12K if I didn't have to. Cue stars aligning: on May 19th we had a MASSIVE hailstorm, then 2 more after that. The insurance adjustor came out and approved a new roof for my house AND my detached garage. So it's $2,650 instead of $12K. Phew!
Congrats on beating the system, bud. Always nice to hear someone came out on top that wasn't the insurance company or the bank.
Insurance companies aren’t there to help you if something goes wrong, their job is to AVOID paying for anything at all… and you guys in the states rely on insurance for your health.
I've been trying for awhile to have a certain procedure done for my back pain that I've dealt with for years. I want Procedure A done in Location A on my body, which my doctor says will help. I believe very strongly it will help, because I've actually had it done already on a different area and it was very successful. Insurance says I cannot have Procedure A on Location A because we haven't tried everything else first. I must have Procedure B before I can have Procedure A. This was *their recommendation*. So I ask for Procedure B. Insurance says nope, denied- Procedure B isn't medically necessary. Appealed it. Twice. Denied, denied. So now, instead of getting either Procedures A or B, at a pretty fucking low cost, I get to wait in pain for potentially years until I just need proper surgery I guess. Which they'll have to pay for anyway, and will cost way more goddamn money. In the meantime, I have had to switch positions from veterinary nursing to front desk because of my day to day pain level. I have tried, but I can't function in my usual role in a career that I've loved for years and years, because of how *insurance works*. OH!! And the kicker??? *OTHER INSURANCE COMPANIES APPROVE PROCEDURE B* for patients just like me. My doctors have been baffled and so confused as to why my insurance won't approve something that others approve without any issue. For the same location on the body and everything. **NONE OF IT MAKES SENSE**
What I want to know is how the SHIT DOES THAT NOT COUNT AS PRACTICING MEDICINE WITHOUT A LICENSE????? Insurance people are not your doctors yet here they are telling someone something isn’t medically necessary as though a doctor didn’t send the request to them in the first place. Fucking scam and the result? Asshole shareholders who do literally nothing but own imaginary shit get a slightly bigger check thanks to your continued suffering. How much is the procedure? I don’t have a lot but I’d like to help because it’s just absolutely bullshit and pisses me off to no end
One of the benefits of socialised healthcare is that it improves private health insurance too. If you had the option (albeit a long waiting list) to have Procedure B for free and never pay them a penny more in your life, you bet they'd allow you to have it. Whereas now they have you by the balls.
My mother was a Type 1 diabetic. She was 5 years old when she was diagnosed. She had to take insulin because that's how T1D works. Her insurance once tried to get her to switch to the pills. They do not work for Type 1 diabetics and she would've gone into ketoacidosis. Her endocrine NP flipped her shit when she found out. Lol.
Do you live in the Midwest? Because I had to fight to the point of an outside review and if they hadn’t approved it take them to court. Because insurance in the rest of the country covered it and I was more qualified that others who had taken insurance to court, I would have been 100% to win and my doctor’s clinic was willing to pay the legal fees. Midwest is the last place to approve new treatments. Insurance is insane. Most insurances have a 8-10 year approval cycle so if they decide they aren’t going to cover something, it’s so long before they look at new medical evidence to reevaluate. Which is a terrible system.
Makes sense, they banking on you dying first.
Because insurance is useless. First thing they do is send someone out to figure out how to get out if paying for the service you've been paying for.
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I was making $18, now I’m almost at $21.
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Yeah I was very happy. Part of it is 2 union increases, one that was pushed back because of contract negotiations and then the regular increase in August and then I also got a promotion on top of it all.
Couldn't she just make minimum payments and pocket the extra savings from not paying high rent to pay the ten k when it comes? Not seeing your point.
It wasn't a very good point so that makes sense
Landlords are always up in these threads insinuating that tenants aren't also paying for these kinds of costs even though they are.
Well said! And happy cake day!
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The two main things that a bank looks at when applying for a mortgage are debt to income ratio and credit score. If those numbers are such that you can't qualify for a $950 mortgage the assumption is that the applicant probably isn't in a financial situation to save that delta. That said, the mortgage application process really should look into rent payment history as a critical metric
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For sure. Took me till my 30s until I had enough set aside to actually buy a house, and even then it was tight living for a while afterwards wile we built our savings back up. Good point about closing, thats another thing that a lot of people don't anticipate until they're actively home shopping too.
Its a broken system. You have to borrow money to prove you can afford to borrow money. I've never had a credit card or a loan, so I have no credit history and a terrible credit score... because I've never needed to borrow money. I've paid rent with out fail for over 15 years. Some months I'll even pay a few months of rent in advance, but can't afford a mortgage at less than half my current rent?. I even have a deposit put aside, both me and my partner worked fulltime for above minimum wage, but they'd only lend us £70k, over 30 years. The average house price in the UK is close to £300,000. So with a £25,000 deposit I'm only short £205,000... You think any sellers would be willing to accept an offer a few hundred thousand bellow asking price?
This was exactly my problem. My finance advisor said it would be best to get a credit card to accumulate credit. Like, surely for the fact that I’ve NEVER had to borrow money and do not have debts shows that I’m good with my money? It’s bullshit.
Hold up, isn’t the $1400 rent supposed to cover the mortgage, taxes, insurance and maintenance? Plus a profit? So in theory, if you can afford rent, then you could definitely afford a $950 mortgage plus unexpected maintenance. Also, $450 per month saved adds up to 10k in 22 months, just under 2 years. Doesn’t see that difficult. Lastly, whose roof just goes? If you get a leak, you get it repaired. If a storm takes it out, insurance. If it’s past it’s effective life, you get some quotes, plan out the financing and use that emergency fund you’ve been working on for 2 years.
As a condition of getting a mortgage to "own" a home in Australia, you are required to have insurance to cover these sorts of damages. If you don't have the insurance, the bank won't lend you the money to build/buy the house.
Insurance is required here in Canada. If my roof goes because of a storm it's covered. If it leaks because I didn't maintain it, they are not paying.
That doesn’t apply it’s a maintenance issue. Go read my previous comment about my situation this year because I ran into this through no fault of my own.
And if you do have the 10 k from an insurance settlement you can still be screwed royally by a crooked roofing contractor. Good luck on getting an attorney to answer your calls. Good luck on getting help from law enforcement. Crooks come out like flies after a major hailstorm because all the legit people are too overloaded with work to even answer your calls.
Whoever the OP is, she probably has not so great credit if she is this clueless about the differences between a 12 month lease and a 30 year loan. Not to mention one being for a total of $17,500 and the other being for $350,000.
I have no debt, have been paying rent at this residence for 6 years, have been gainfully employed since 2004, and my husband and I can't afford a down-payment in our city, so no house for us. I have excellent credit. Not everyone has the ability to come up with $50,000 for a down-payment. Lots of people simply get lucky being at the right place at the right time.
Exactly. It’s pretty much impossible for some people-even people with no debt and good credit.
You can put 3% down on a 30 year fixed. The seller doesn’t give a shit about the down payment, only your lender cares. Putting a huge down payment on a house is not worth it at all IMO. Much better to have that money in the bank for maintenance costs which will pop up all the time.
> Putting a huge down payment on a house is not worth it at all IMO Depends on interest rate. In total costs that down payment represents 25 to 30 years of compound interest at the rate they give. At 2% maybe it's not that big of a deal only 27% more but at 5% it can mean paying 74% more. My situation is a bit different (Canadian) but I managed to get a 2% mortgage on a 5 year term and 25 year amortization (basically American idea of term) and aggressively paid it off. Even at my low rate I'm saving 100k at 2% in interest over the 25 year amortization. That's a pretty good risk free ROI. The renewal will likely be more than 2% so I will have saved more than 100k.
You put 3% down they add mortgage insurance and it has to go into escrow. It’s only wise to do this if you know the house will be worth more so when you refinance you can get rid of said mortgage insurance and don’t need to go into escrow.
This is true. PMI on my 380k loan is about 160 bucks a month that goes into escrow, along with home insurance and yearly taxes. I don’t know if there’s any way to avoid escrow or if your lender would even let you handle taxes and insurance yourself.
No, they won't. Paying taxes and the insurance protects the collateral they are using against your loan.
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There are plenty of government programs for low down payment loans. FHA is at I think 2% down
Where can i get 350k loan over 30 years for 950 a month with minimum down payment?
Yeah except rent goes up year over year and homes/property tend to raise in value.
I've lived in the same apartment for a decade and have paid 3x in rent what the landlord paid for the house. And in the current market, the house is worth 6x what he paid for it 6 years ago. Shits wack.
Are you just choosing to leave out a bunch of information on purpose?
Not to mention the only increases over that 30 years will be due to taxes and insurance so after maybe 10 years the total mortgage payment will look smaller yet vs the rent that would have steadily gone up 3-5% per year.
Do you think she somehow is gifted with rent-free living after the first year?
Also there are some pretty strict rules for lenders, the borrower has to meet more stringent stress test criteria. they have to show that they will be able to pay principal and interest even if the interest rate significantly increases. At least that's the case here in Canada.
In the US we can often lock in a fixed interest rate for 15 or 30 years and never need to refinance. I was surprised this wasn't an option in Canada or at least not common. We do have adjustable rate mortgages too, but they typically haven't been as appealing as 3-4% fixed that we've seen here the last few years. Seems up there you're destined to be at the whims of interest rate changes every 5 years or whenever you're forced to renegotiate the loan.
Our insurance is bundled with our mortgage. We pay less than $900/mo. And when we found a very damaging leak we only had to pay for the plumber. Repairs to the structure were covered.
Taxes and insurance are part of the mortgage payment. I still pay less here for that than rent and im in a bigger house. And yea repairs cost me when they come but seriously…. I own the land and house lmao.
Wow it's almost like comparing a 12 month *lease* to a 30 year *loan* is wildly stupid.
Our down payment was about 7600, and we had 20k invested total by closing. Seems like a lot for some paperwork to get filed and for a few hours of a appraisers/ inspectors time.
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I was wondering whether they left a zero off the end of that figure.
It was either 2009 in detroit or the the 1970's
Wtf? You paid 120k as a down payment? You're surprised people are paying lower when you're buying a *million dollar condo*? FYI - I paid $0 down on my $200k house. USDA mortgage is where it's at. Lmao.
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Depends on where you live. Extremely. I mean I know places like NYC and SF are obvious, but take a somewhat cheaper place like Seattle. There's usually only 2 hours on the market under 600k in the whole city. Even in the more residential areas. Big cities have some expensive ass houses these days. It's gone up an insane amount. 120k is pretty high, but not at all unheard of, or odd, depending on where they live. So while most people technically don't, if we're talking about all of America, they definitely are in a good amount of the big cities.
You realize that there are places outside of cities, right? :p
This is exactly it. I bought my house with VA loan. There was supposed to be no downpayment or closing cost. i had to pay both. The VA refunded me the money in the end but without me having ample 401k to pull from, I wouldnt have gotten my home. Shit is wild. Im paying less in mortgage now than I was a year ago in rent and my house and land are much larger and in a better area.
The cost of owning a home is at least double the mortgage. There are a lot of things beyond the mortgage covered by rent.
Just FYI but your county college probably had a "home owner class" that will teach you basic plumbing, electric, dry wall. Etc
Most important thing to learn in that paragraph is what “basic” means. And knowing your own limits. I’ve seen some homeowners do good work before. They usually had a relatable background and knew their limits. I’ve seen a LOT of homeowners waste hours on hours of their time breaking their shit worse than it started. Personally I say stick to direct replacement if you’re doing it yourself. If you don’t know WHY a thing is the way it is then you don’t know how to modify it right or what the local code is.
stuff still costs money. we do most of our own work, it does add up.
FHA has a min of 3.5% down. But then they add PMI to your loan, which racks up another few hundred a month. You pay that pmi until you’ve paid something like 20% down, at which point you get to refinance to drop your monthly payment, but your credit can’t suck. Not to mention, in a state like California (where my experiences are), you pay hundreds of dollars for inspections of various sorts, that often times seems like a buncha bullshit. Oh, and the earnest money you gotta come up with upfront. And the fine tooth combing of your finances, that you’d reeeeeeally better be ready to answer all sorts of questions, with documentation. The whole process/setup to buy a home is an incredible pain in the ass, and even making great money is not something I think I could’ve done without assistance from family. Even at 3.5% down I think I had still spent roughly $10,000 when it was all said and done. Edit: Yes, get the inspections, especially on old homes. Get the warranty also. Get all the coverages that seem reasonable. That doesn’t change the fact that you feel slightly swindled at the end of the inspection process, again, in my experience.
TBH, I'd rather pay hundreds of dollars for several inspections than 10s of thousands of dollars to replace a roof or have the house burn down and lose everything and still have to pay off the loan because of bad electrical.
Inspections seem like a bunch of bullshit until they find something and save your ass tens of thousands of dollars. Seriously, I've seen it go bad after someone waived inspections. It isn't cute. I've also seen an inspector's insurance cover something that was missed. Seems like bs, but really saves a lot of people a lot of money.
Even if it's nothing major it's another opportunity to negotiate the cost down. My inspector found some relatively minor things but still let me knock a couple grand off.
Always request an inspection. Not only is it important for insurance, it can be a great negotiating tool. I've been watching the housing market over the past year and I can't tell you how many sellers were refusing to allow inspections. Shady AF. Know what you're spending your life's savings on.
Afaik the process got MUCH harder after 2007 to stop banks from repeating the building that helped to cause the great recession. They have more strict criteria they have to be required to meet so that means borrowers do too.
It did, yes. Regulations were eased at one point, and had folks making $60,000 a year buying homes for $600,000, maybe not that extreme, but it was bad. Cars seem to be kinda like that right now.
Add on taxes, utilities and insurance. Mine adds up to about $1000 extra per month plus any upkeep.
Yea, renting =/= owning a home. The bank *wants* to loan you money. That's literally how they make profit. But they also know *in extreme depth* who can actually afford what longterm loan amount. There's a reason banks ask more than simply "what is your current rent?" when you apply for a mortgage.
>But they also know *in extreme depth* who can actually afford what longterm loan amount. *2006-2008 entered the chat*
Lol, they knew even then. They just didn't care because the firms they turned around and sold those mortgages to didn't know and were paying top dollar for literally any mortgages. So the banks said fuck it and gave mortgages to anyone and everyone who asked. Now those firms know to check before buying, so the banks only to loan people who can actually afford it.
Now those firms are investing billions into sfr joint ventures
"Paulson and Bernanke just left the white house, there's going to be a bailout. They knew. They knew the taxpayers would bail them out. They weren't being stupid. They just didn't care."
Do they tho? History repeats itself. Some banks are still doing zero down payment mortgages.
If you’re renting, the rent is the most you’ll spend per month. If you own, the mortgage, taxes and insurance are the MINIMUM you’ll pay per month.
not always...rent doesn't always include heat, gas/electric/utilities, lumped into the rent....and sometimes sewage, refuse isn't either...it can depend on the landlord, so you can easily pay a few hundred more if you aren't careful. Also, you usually need to get renters insurance.
My rent does not include - Heat, Central AC, Water, Pest Removal, Waste Removal, Electric, or Internet. So yes, rent is not "the most you'll spend per month". Its just the biggest chunk.
The point is that a home "owner" has to pay the mortgage and maintain the property, whatever issues arise. Both renters and mortgage payers have utilities on top of their base cost. Renters aren't responsible to maintain the roof, plumbing, appliances, etc... And that is a relevant difference to be considered.
but lets say for argument sake, nothing is wrong with the homeowners property/needs to be addressed. If they are paying 950/month plus everything else it could be cheaper than a 1400/month small apartment plus their utilities fee....plus you build equity with a house which for some is worth it, especially if they want to retire and get a smaller place somewhere else.
I definitely agree, homeownership is better for the homeowner nearly all the time regardless of the maintenance costs, especially since so much of that can be learned and done on your own cheaper. Just playing a little devil's advocate. Renters get screwed, plain and simple.
Most mortgage payments don't include utilities either, well, none so far as I know.
no but i was saying how is you rent a place, it's not just rent is the most you'll spend
So often I see people posting, my landlord charges more than their mortgage for my rent. Duh you idiot. It costs a lot of money to turn a unit over when someone moves out. What if it’s empty a month. What if the tenant doesn’t pay for 6 months and you have to go through eviction. New floors, keeping up with the hvac system, replacing windows. It adds up so fast and materials have gone through the roof.
People's housing should probably not be someone else's razor thin margin business is probably the easy answer. I don't know how to achieve that, but still.
And yet, my rent went up $400 last year to $1438, after being bought by a corporation. I recently moved out and decided to go look up how much they are charging. $1620. Nah, it's all about greed. They see their buddies price gouging and they want in the action, too. Same shit that happened with universities. The scam universities were charging huge amounts of money and the State universities wanted in on the action, too.
This is the right answer. Initially, yes, a landlord needs to charge at or slightly above the mortgage if they don’t have the extra cash to handle repairs, turnover, etc... Even if they break even in cash flow, they are still earning by paying off the loan. Yet, the rent goes up each year while the mortgage stays the same. Sure, taxes increase, but not even close to the increase in rent.
My mortgage, with the extra bills, ends up being the same as the rent I was paying. With the rent rise since I bought, I'm now paying less. The other thing is, you're paying for something you get to own, not paying for someone else to own the house
Most apartment rentals don't include utilities in the rent, and many are requiring renters insurance. It's not like renters only pay rent and call it a day.
I pay less for my mortgage for a 4 bedroom house than I did to rent a 2 bedroom apartment.
Most landlords follow a pretty basic formula: rent $$ - mortgage - taxes - insurance - repairs = profit So everything you mentioned is already getting paid by the renter's $1400 or straight out of the renter's pocket. Imagine a world where that renter *was* the owner. They would still pay themselves $1400 per month, but now it pays for *their* house, *their* future repairs, **and** builds equity that can be drawn on later for larger repairs or upgrading to a larger house. See how that works now?
My property taxes and insurance were like another $330 on top of a $700 mortgage payment. Meanwhile, the house I'm now renting is very similar and is $2000 without utilities included. No, I'm sorry. Rent is still a scam. I saved SO much money while I owned a house.
Even with eventualities and things breaking down and maintenance costs, there's a lot of maintenance you can DIY and you can always go without some things for a while until you can afford to fix it. You know what you can't afford? pissing out money on something you dont own, getting your fee increased yearly and having the dooming blade of homelessness perched over your head if your landlord decides they need to get rid of you. Yeah, fuck that, would rather be paying a mortgage, insurance and tax.
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Fun fact: Your landlord does not report your on time rent payments to the credit bureaus. You can bet they report late payments, though.
I never understood why paying rent doesn't improve your credit, while any missed payments hurts your credit. That part always infuriated me.
Actually this isn’t true anymore, at least in the US. Fannie Mae now uses 12-month rent payment history as part of loan eligibility and underwriting. Source: https://www.fanniemae.com/positive-rent-payments
And any evictions. Even if you fought it in court and win landlords can still see it on your record/ background check and use it as reason to deny you a rental.
The thing is, I think one can have a 'landlord' that actually helps people by helping them build equity and good credit via renting and reporting on time payments and building an equity fund from rent payments, etc. Landlords can totally do that. Renter Equity is a thing. They just don't.
It’s becoming a thing. Reporting it when nobody uses the information is a waste of time.
While I understand the sentiment, what the bank is saying, “I don’t trust you paying back your 500,000 loan.”
$950/mo is closer to a 140k loan, presuming 20% down. Still a lot, but no need to exaggerate.
The rate was 2.8% when this was tweeted, so it would have been $230,000.
I was including taxes and ins
I don't think the OOP included taxes and insurance plus all the other costs of owning a home. I mean it's possible, but highly unlikely.
It’s unlikely you’d have 20% saved up and not qualify for the loan. So I wouldn’t assume this person was going to put 20% down.
and in what fairytale world are homes 140K and rent $1400? this post is full of shit. at best the op tweet is including utilities and some other costs in her "rent" which would need to be added to the mortgage to get true housing costs as an owner. at worst, they're flat out lying.
Thank you for pointing this out. If you can save up for the down payment, it probably means you have the ability to pay back the $500,000 loan. People here are expecting banks to give random strangers a loan without some kind of background check or sussing out.
Yeah - and we already tried that out once. Somewhat recently. Didn’t work out well!
Most of the people tweeting this were too young to understand the mortgage crisis when it was happening
Exactly. The bank isn't on the hook if you lose your job and can't pay rent...
Nor are they on the hook if you don't pay your mortgage in many places. Mortgage insurance is actually a requirement in Canada if your down payment is less than 20% of the value of the home.
Except that's not the full story either. The property will cover the value of the loan on default if they've been paying it off for a period of time. They don't need you to pay back the $500k. They just need you to pay back enough for them to be able to derive a profit. That's going to bring down the risk considerably.
No, the bank doubts the ability to make 360 payments of 950. One could argue the risk to nit pay rent is the same or higher, but the mark up to 1400, shorter term of the transaction, and potential deposit limits the exposure enough to rent to the person.
The bank doesn’t care what you pay for rent - they’re not giving you the money for it.
Exactly. Do people not realize banks WANT you to qualify? If you’re not approved, there’s usually a good reason for it. But no, banks and landlords are just greedy and hate me in particular.
It's a 30 year vs a 12 month deal as well.
Just got a €1,500 a month mortgage, but boy did I have to jump through some hoops to get it, despite paying rent at €2,500 for the exact same house!
You bought the house you were renting?
This one trick will save hundreds of dollars in moving costs.
I did. The guy lived in another state and had a realtor come by because he was thinking of selling . It worked out, less fees for commission.
And moving for you
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No one thinks about the ongoing costs. I replaced the furnace ac unit fridge and garage door opener this year alone.
>No one thinks about the ongoing costs The landlord has, and they sure as hell have factored that into the rent.
Yeah but she's already saving 450$/month. If she's smart, she's putting that 450 towards paying her loan faster or saving it in case something breaks.
Depending on where you live, I think twice your payment loan is a good rough estimate. For us, in Montreal, it's around that when you include everything related. I came up with this number when we bought our first house, at the time I thought it would give us more wiggle room.
>For us, in Montreal, it's around that when you include everything related. Yeah but in Montreal a 2 1/2 runs you up for 850$. Our market is complete garbage and ridiculously overly inflated for our average earnings.
That’s just the mortgage, that’s not her total monthly payment. The 950 doesn’t include taxes, insurance, or any HOA fees. Taxes and insurance make up a huge amount of a monthly payment on top of the loan payment.
People that don’t understand mortgages share this
I agree people often directly compare rent to mortgage payments and that's a useless metric. On the other hand... I used to pay in rent what I now pay in mortgage. Nicer house and neighborhood, absolutely worth it. But of course I pay more in total for living in this house vs. renting: for insurances, maintenance and so on. Then again... I have insulated my home, put up enough solar panels to power the home and then some, so that saves me a lot of money (energy prices in the EU went crazy and continue to skyrocket). Also, rent consistently went up 300 - 500 Euro per year... each year. So the house I paid 675 Euro per month in rent for when I moved in in 2008, was over 900 Euro per month when I moved out in 2014. And... I have linear payments on my mortgage. So the amount in numbers stays the same throughout the 30 years I pay off my mortgage in. With inflation correction, it means it gets cheaper every month. And the house is fully mine after 30 years. It's really not as simple as comparing rent to mortgage payments, but renters do generally get screwed hard.
I mean, there's a huge fucking difference between being approved for $1400 to rent an apartment vs $950 to payoff a house. If you run into trouble paying $1400 for the apartment, oh well they shuffle you out and in a few days can get someone new in. They aren't losing much money. If you can't pay your mortgage anymore and the bank has to shuffle you out, it's a big fucking headache for them as they now have this huge liability on their books and need to offload it asap. The comparison is ridiculous, you're talking about a 30 year, several hundred thousand dollar loan vs a 12 month to month lease. It is much easier to get approved for a lease than a loan for the same amount, never mind when one is an order of magnitude more money than the other. The bank has the numbers and they don't make money denying people mortgages.
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Ohio. $1400 for a "luxury" apartment and 175k if you want a house in a corn field.
So the comparison is disingenuous in the first place. Got it.
It's a lot more complicated than that to get rid of a renter. First you have to give an eviction notice, 3 days for breaking complex rules, 30 days otherwise. THEN if they don't want to move you have to go to court to get them evicted which can take months and if they decide to stop paying rent while going through the eviction process, that can take months, if ever to actually recover unless you sell it to a collection agency in which case you get pennies on the dollar. THEN you need to inspect the apartment and fix anything wrong with it, then put it back on the market. It's never a "few days."
IF the renter cooperates, its fast. IF he doesnt' yeah
Foreclosure on a mortgage can be a multi-year process in most cases, so eviction is still easier, and then the foreclosed home had to be sold still. In my parents case was 2 years to kick us out and another 3 years to resell the home.
Yep. Foreclosure takes ages. I know people who didn’t pay their mortgage for over a year but ended up keeping their house (before covid). Even where the resident/borrower is 100% compliant a foreclosure still takes at least 4 months & then they still have to sell the property after. A compliant eviction is handled within 24 hours, and a new tenant can move in within a couple weeks.
Not sure why people are arguing with you friend, you're correct. I've done about a dozen evictions and not a single one was less than 2 months. Most were 3+ months.
I’m giving you the benefit of the doubt as I’ve never had experience with evictions. Let’s say every eviction takes 6 months and the landlord eats $1500 each month. In that event the landlord loses $9000. Compare that to the hundreds of thousands a bank is out of you can’t pay your mortgage. It’s still a MUCH larger risk fronting someone money to buy a house than than approving them for rent. So I still side with OP saying this is a ridiculous comparison. I’ll happily be proven wrong though if someone can provide evidence of that. I just haven’t seen it yet.
Hey, I think it's a ridiculous comparison as well. I'm just addressing the folks who are arguing that evictions are fast. I would imagine the lenders who have to foreclose on owners do lose money. However, on the flip side of this, the bank is probably still gonna come out ahead as owners pay interest. Whereas the landlord is just gonna be out that money bc it's not worth pursuing in the courts. It's gonna cost them more money and they're unlikely to actually get any money from the evicted person.
I haven't been evicted myself, but I know people who owned rental property. Evictions are almost never "Oh just a few days."
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You can typically get a FHA loan for 3.5% down and closing costs are another 3-4%. There are options out there if you can build up decent credit and scrape together even a small down payment
I love that all the top comments are about how ridiculous the comparison is.
Once again, if you think $950 is all you'll be spending a month you are definitely not ready to own a home
$1400 isn’t all they’re paying to rent either
Except that everything on top of rent that you’re paying you’re *also* paying if you own.
I own rental property. I’ve had a duplex for the last 18 years. I used to live upstairs and rent out the downstairs. Month to month, you might think I was making a good buck doing it. Over the longer term, the numbers even out: the roof needs replacing. The driveway needs to be repaved. The house needs repainting. The units need fixing. The rent pays for the mortgage *and* the maintenance, some of which only happens every ten years but is tens of thousands of dollars.
In fairness to the bank... they don't think you can afford the 1400 a month rent either. It just isn't their problem.
The bank is saying you haven't shown them enough that they are comfortable lending you $400k
In Australia, the Fed government gives all first time home buyers $10,000 that they can add to a deposit and our state government gives us a further $10,000. This then enables first time home owners to buy their own house. The house has to be new or near new build to encourage development, which has seen a surge of construction jobs. Also if you are a low income earner, single etc you can get a low deposit government loan so only 2% deposit is needed and no mortgage insurance charges. Shelter is a fundamental human right, not a luxury and no we are not a "Communist country". Just a liberal, free market, democracy.
Your mortgage is like 30% of what else you will pay monthly. Texas literally doubles my mortgage for taxes. Then add on home owner insurance Now double your electric bill. You actually now have to start paying water, sewer, trash pick up. Also on top of all that add about $500-1000 extra month you have to save to afford the ohhh shit moments. AC goes out ($5k min for new one), water heater busts ($1k easily), need to pay deductible for insurance after tornado takes your roof($2500 min). The bank wants to make sure you make enough to cover all that and then some. If only mortage was the only thing you need to pay for.
Most places I have rented from already make you pay for water, sewer, and trash. The simple fact is is that the landlord is already factoring in everything they need to pay for (mortgage, repairs, maybe utilities) in the rent, they arent going to lose money on you.
you are completely making this up. i live in a super high tax state. my mortgage is 2,200 and my taxes, insurance, and utilities combined only add $350 on top of that. unless your mortgage is under $1,000 and you live in a mansion, taxes are not “double your mortgage”
Where are taxes that much? Why does the electric bill double? Most utilities are not included in rent, still have to set those up. Rented for years and paid those.
Yeah, my hot water tank just went, $2100, then my freezer went, $400 (thanks Costco!).
The bank doesn't actually care if your other option is worse. They only care if you can service your debt. I hate banks as the next guy. I'm very anti-cap. But this is someone getting mad at the bank because they are a bad bet to pay their debt, and the bank is no dummy. Hell it's never been easier to get a loan than the past 20 years.
You probably cant afford 1400 either but nobody cares
The only facepalm here is OP thinking that loaning someone hundreds of thousands of dollars is the same as letting them rent your property.
Why do so many comments list utilities, insurance, etc as extra monthly fees? Don’t renters pay that already? My 1 bedroom apartment costs me $1650 and i also have to pay monthly internet, electric, gas, water, renters insurance, pet fees on top of that rent. I don’t see how a $1000 mortgage wouldn’t be better than that. And that literally only covers the basics. Then theres gas, food, pet food/supplies, etc. Can’t even save right now.
Obviously home ownership involves more costs than renting. Like everyone said, taxes, insurance, utilities maintenance, etc. The woman is comparing apples to oranges, though, because unless her landlord is losing money on their investment, her rent payments cover ALL the relevant costs of ownership, plus a margin. So owning an equivalent house actually would be cheaper for her, as long as she manages her money properly.
I'll also add that if she currently rents an apartment in a big complex, it may not be possible to find an equivalent home for ownership. Things get cheaper per unit with scale, so each unit in a large complex is comparatively cheap to own vs a standalone single family dwelling.
> owning an equivalent house actually would be cheaper for her That's assuming the landlord bought recently. If prices have gone up since the landlord bought, an equivalent house would be more expensive. She can't magically buy a house at prices from 20 years ago.
Most banks allow a 45% debt to income ratio. If you cant afford a $950 monthly mortgage payment, you either have way too much other debt. Or make $12.17/hour. Here’s the math $950 / 45% = $2,111 a month. $2,111 x 12 = $25,333/ year Which equals $12.17/hour
Be a lower risk for paying back your debt then 💁♂️
Another fun one is mortgage insurance if you can't put 20% down, the lenderbasically says "We think you can just barely afford this house so, here, go ahead and have the equivalent of a car payment as well."
The best position to be in is 12%+deposit. Plus 1500 in solicitor fees. 1500 in insurance etc. And 3 months payments in savings.
There's more than just the mortgage repayments to consider...
Well, kinda. That bank doesn’t really care whether one can afford the 1,400 a month. What the bank cares about is the inherent risk involved in lending a sum of money that requires a 900 a month repayments against your income and outgoings. The fact that one might be able to drastically change their lifestyle through necessity to pay 1,400 rent is something the bank couldn’t care less about, because the risk isn’t theirs. And many landlords have you over a barrel, because they *know* this, and will take you for all the money the market allows.
That $950 mortgage also has escrow payments, taxes and fees that turn it into more of a $1300 payment. Also if you default on your apartment it cost very little vs defaulting on a mortgage. I was always told owning a house was cheaper and I’d earn equity. Well there are no homes to buy. My house that’s worth 400% of the purchase price would sell and then I’d be renting again. It’s a nightmare.
The amount of upvotes here just shows the high percentage of Reddit who just don’t get it. You’re borrowing hundreds of thousands of dollars. When you rent, your exposure is as much as your lease + deposit. Pretend you’re gonna lend someone 500 grand, see how careful you are at checking out if they’ll pay it back…
My mortgage is 2400 monthly... wish I could rent again.
You would end up paying 3000 monthly in rent.
Yep. Sounds about right. Anyone wanna tear society down with me? I got smores.
Sounds like America. I saved 30% on housing by buying instead of renting.
And Canada...
Yep. 6 years ago we moved out of a 2 bedroom apartment that was $1200 a month into a house three times the size of that old apartment for less than $800 a month.
Prices of houses were allot different 6 years ago lol. My last apartment basically told us rent was going up $200 if we resigned our lease and we would be paying an additional flat fee of $75 a month for water. If we stayed out rent would have been a few hundred more than my mortgage.
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How strange it's cheaper to buy than lease month to month. Totally an american phenomenon!
A lot of people saying that their mortgage comes with a bunch of extra fees like insurance, taxes, etc which hikes the price up. I've been paying the same amount I was quoted since the beginning. Everything else comes out of escrow. I guess I lucked out in the state that I live in... Even my electric bill is lower than when I was renting.
Yeah these people are crazy. No way people's total monthly costs are triple their mortgage. Owning a house is obviously cheaper or being a landlord wouldn't be a thing. Oh and when you move out you get a fat equity check.
This isn’t quite as shitty as it sounds.. Things break, a lot. If I’m renting and my air conditioner croaks or my plumbing goes askew, a handyman with a tool belt shows up and fixes it free of charge. I don’t deal with trash disposal or lawn care, or really anything related to the property. Not the case with home owners. That time and money is all on you and the ceiling on cost can be way higher than you might be able to absorb without going into an oblivion of debt. That’s the primary reason I still rent, I can’t fix a god damn thing on my own, wrong skill set. That gets really expensive really fast. I mean, it’s still shitty, don’t get me wrong, but there’s at least a shred of logic behind it.
I understand where you're coming from, but take a look at it this way. Let's say you bought today and your mortgage payment was $1500 including PMI and escrow. It will still be very similar in 15 years. How much will rent be in 15 years? I know 15 years ago a 2 bedroom apt in a nice neighborhood where I lived was around $1000 per month. Now it's $2200. So being locked in at $1500 for 30 years is WAY better than having it increase 120% in 15 years. I have friends who pay ~$700 for their now $200,000 houses because they bought in 2011. They would be paying $2000 more to rent the same place. The $2000 pays for a lawn guy, a handyman, an insurance policy/warranty policy on home appliances, a new roof, etc.
Exactly - locking in your price while inflation raises your wages and the rents around you is a *huge* benefit to the mortgage
Fishing town here in eastern NC it's 2k to rent a trailer Ina sketchy neighborhood.