this post was submitted on 15 Jun 2024
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What is incorrect are claims the bank owns the house.
The bank does not. A mortgage is a debt on the property, or if you like, a debt with the house as collateral. While this gives the bank certain rights while the mortgage is still extant (if sold they will be repaid, etc, if the debt is not paid the house is taken In recompense), they do. Not. Own. The. House. They have zero ownership. The house belongs to those on the title.
I really hate the 'banks owns the house' mentality, it's not true and this weird transferral of power to 'another landlord' is putting the collar around your own neck and ceding power for no reason
Like I said, the house is bought on debt issued by a bank. You are not actually a full owner in that you are no longer paying rent for housing. You are paying economic rent in the form of interest to the bank in order to buy the house. The usual term of this agreement is 30 years in the US. The only way to avoid this is to already be so rich that you can buy with cash, which excludes nearly everyone under the age of 50.
Fiscal propaganda usually holds that you are gaining equity, so there's no rent. They even substitute hand-wavy estimates when accounting for housing costs in economic statistics rather than measure what is paid over sticker price. But you will pay a large quantity of money to the bank for the privilege of buying the house and until you have paid off the loan, you are constantly at risk of foreclosure should you be unable to make payments. Just like... rent.
So there is rent in the form of economic rent (debt interest) and there is the rent-like behavior of needing to make regular payments or lose your housing.
Many people are surprised to learn how financially trapped they are by their attempt to gain housing security. This is because they do not expect the financial system to continue to exert quite as much control and for so long, nor for the real price tag to, with compound interest, be often double or triple the sticker price. And that certainly makes many feel, validly, like they don't really own the home.
...no. I mean, you can have your feels on home ownershio being a fiduciary trap, but don't try to present them as fact.
Feel free to point out what I've said that is actually incorrect.
repaying a loan is not 'rent-like behaviour', applying a brush that broad would paint any regular payment as 'rent-like behaviour', which is preposterous.
'Economic rent' is a meaningless phrase, especially in this context. Rent is a concept of lease without ownership. We are literally talking about owning property. There is no rent. There is debt and burden, sure, but there is no rent.
Equity is not a lie. It's the very simple concept of a property's worth after deduction of amounts owing. Now the nuances and application has gotten insanely out of control in miltiple countries (I'm Australian, ask me about our multigenerational housing inequities!) But the basic idea of inflation increasing cost/value is generally sound.
A rental property and a ppr are nowhere near each other, not financially, socially or emotionally. They cannot be equated, no matter how much you torture the syntax. Each has their place for personal preference, but they are not the same
I'm not being broad, I'm specifically talking about what it takes to "own" a house for the vast majority of people on this website. In order to do so, you must enter into an arrangement with a bank wherein in order to have housing, a basic necessity, you must provide monthly payment, half or more of which goes directly to the bank as interest. If you do not make the payments in a timely manner, you lose your housing.
People looking to buy rather than rent are usually interested in housing security, in actually owning the place they live, rather than having to regularly pay someone else for the privilege of not dying from exposure. In reality, these arrangements make them a partial owner at best, roughly equivalent to the equity. You will learn this rapidly if you are foreclosed on.
I encourage you to inform yourself of the meaning of the term "economic rent". Spiraling land and housing values paid to real estate and banking interests is a financialized form of economic rent. The land component is one of the very oldest recognized forms, in fact.
I didn't call equity a lie.
They are quite similar, actually. You will be paying for someone else's mortgage, namely the banker's, but just a smaller amount, solely for the privilege of having your own mortgage. Giving them different names doesn't change the financial relationship in which you are paying an excess to someone else just to have housing - and giving them the ability to remove that housing based on your personal finances. These are basic and undeniable facts of how the financialized housing market operates. It did not always work this way and the history is quite revealing.
I didn't equate them. I'm afraid you're exaggerating.
I've said "here are some similar things" and implied that one's ownership of a house is incomplete if they have a mortgage. Not much torture of syntax going on, I think it's pretty straightforward.
Renters are almost always economically coerced into renting, it's not a preference. The people who do think of it as a preference are rare and are usually so rich that they don't care that they are paying more to rent than have a(nother) mortgage.
Do you have many friends that rent?
Don't try and turn this into a ridiculous class war statement on me. Am I a homeowner? Yes. I've literally only been a homeowner for 13 months. Before that, I rented for over 26 years. Most of my friends still rent.
And yes, there are people who choose to rent - some choose the motility, some choose to invest over mortgage and some choose to remain renters for the reasons stated in the start of this very comment thread. Don't pretend otherwise.
You're still acting like loan debt repayments and a rental payment are the same thing. They are not. I don't care how many times you go to the "if you stop paying you lose your home" well, that's the barest, most facile comparison imaginable.
The idea that renters simply have a prefer rent is absurd and I was attempting to be charitable in that you might be socially removed from this reality. What is your excuse for this absurdity, then?
These are almost all misunderstandings of basic finance, not informed preferences. False consciousness, if you will. There are a handful of people who live in a place for a year or two and should rent, sure. This is very few people outside of maybe college students. Choosing to "invest over mortgage" means you think you'll be netting 100% returns every year. This is for delusional climbers that think they will beat the market or the financially incompetent. Luckily, very few people do this. In the real world, people rent because they cannot get a mortgage (yet). They are economically coerced by not having a sufficient down payment nor financial security to get a loan from the housing brokers - banks.
No I'm not.
I don't think you know what a chud is.
Legality is an incomplete analysis of the relationship of ownership. Cool, you have mortgage. What percentage of your total payment goes to a bank? What happens if you fail to pay for a year or two?
They are similar in this circumstance for the reasons I have provided. Feel free to address them directly if you would like to.
Oh dear.