Why do people take out Mortgages they can't afford?

[Tennis]

If you think about it logically, you should only be taking out a loan if you can make the payments. If you are cutting it so close that if rates rise, you can't make payments, then don't take out a mortgage.

Whatever happened to restraint and living within your means?

If you can't afford to purchase a home then rent or move elsewhere.

[Kujako]

Because before (and now after) it was made illegal to do so, banks would (and now once again are) pressuring people into signing, often by misleading them or in some cases outright lying.

I recommend the book (or movie) The Big Short to explain in detail. And keep in mind that all those things the banks did, were made illegal by Obama and now legal again by Trump.

[Independent voter]

Optimism, it's part of the American psyche.

[Glarolas]

http://www.metronews.ca/news/toronto...=1487028832719

[Adamas102]

Because the average person is fucking terrible with math.

[Tennis]

Why do people use credit cards and not pay the entire thing off at the end of the month?
Why do people take out a loan/finance a car when they don't have the money to just buy a vehicle? (Hint: having to finance a car means you can't afford it.)
Why do people do a lot of shit that's really inefficient and illogical? Because the vast majority of people are really stupid.

But why is that? Do you know anyone like this? I don't think I do.

[Mad_Murdock]

Because before (and now after) it was made illegal to do so, banks would (and now once again are) pressuring people into signing, often by misleading them or in some cases outright lying.

I guess I need to see these lies and misleading offers. I bought my house right before the bubble pop and while I was offered plenty of money, there was a number of ways to see what the payment was going to be and I knew pretty close to how much I could really afford. I just don't know how people who were making 50K a year thought there was anyway they could afford a 300-500K house. Being willfully ignorant is a shame. Something had to be telling them the offers were too good to be true.

But why is that? Do you know anyone like this? I don't think I do.

Calling people really stupid isn't a completely accurate statement. You start out getting a car loan, and then later you get a credit card with a decent limit and then you get more bills. If you're not paying attention or even worse, something major hits you in the wallet, you suddenly find yourself in trouble. For some, getting out of the trouble becomes a challenge and sometimes it feels like the hole just gets deeper and deeper.

Yes we all make stupid mistakes from time to time. Some are just worse than others.

[Kuruption]

But why is that? Do you know anyone like this? I don't think I do.

It's because people don't look into it. When I bought my first hours years ago, they'd say "oh it's only XXX amount per month" but they don't tell you about property taxes, mortgage insurance, and all the other stuff. So you get stuck with it once it's too late. Now after I bought my second house, I was more than prepared at all that stuff.

Another reason is that there's people just dumb with money. I know people who couldn't pay off their full credit card, and then just rack up the fees and interest, but didn't seem to care at all about it.

[Revik]

It is impossible to tell the future sometimes. You could be in the green one year when you buy but a few years down the line you could end up in the crapper.

[Rennadrel]

Because we have no choice, immigration is inflating our housing prices beyond belief. Immigrants come here with little to no money and their communities pay for one another's properties, or they put 3 generations of family under one roof and pay the same property taxes as a family of four. It should be illegal, and the system is getting abused because our governments allow it.

[Deleted]

If you think about it logically, you should only be taking out a loan if you can make the payments. If you are cutting it so close that if rates rise, you can't make payments, then don't take out a mortgage.

Whatever happened to restraint and living within your means?

If you can't afford to purchase a home then rent or move elsewhere.

You obviously don't live in the real world.

Usually there is a change in thier situation (laid off, sick, whatever) and thats why they can't keep up with the payments.

[Reklia]

Why do people use credit cards and not pay the entire thing off at the end of the month?

Reminds me of many years ago when my mum tried to pay off her credit card in full. It was difficult to say the least. Bastards wanted her to keep paying every so often for the interest.

[Tennis]

You obviously don't live in the real world.

Usually there is a change in thier situation (laid off, sick, whatever) and thats why they can't keep up with the payments.

Nobody forced them to take out a mortgage.

[Halicia]

Why do banks issue loans/credit that can't be repaid is the larger issue.

[callipygoustp]

If you think about it logically, you should only be taking out a loan if you can make the payments. If you are cutting it so close that if rates rise, you can't make payments, then don't take out a mortgage.

Whatever happened to restraint and living within your means?

If you can't afford to purchase a home then rent or move elsewhere.

Why are you so anti-USA?

[DSRilk]

If you think about it logically, you should only be taking out a loan if you can make the payments. If you are cutting it so close that if rates rise, you can't make payments, then don't take out a mortgage.

Whatever happened to restraint and living within your means?

If you can't afford to purchase a home then rent or move elsewhere.

First, if you get a fixed rate loan, the rates can't rise. Second, it's most often because they are being told they CAN afford it. When a bank says, "you can afford X amount per month," it's very easy to simply think, "oh, okay." The problem is that some people don't have a great grasp of their actual finances. They also lack the foresight to budget in emergencies, like cars breaking down, large hospital bills, etc. So while in the end, it's because people just don't do the math, it certainly doesn't help when a bank says, "you can afford X." It's made even worse when banks create horrible loan systems that they sell you on and mislead you about. Unless you really understand what you're being sold, it's easy to just believe the "experts."

[Tennis]

Because we have no choice, immigration is inflating our housing prices beyond belief. Immigrants come here with little to no money and their communities pay for one another's properties, or they put 3 generations of family under one roof and pay the same property taxes as a family of four. It should be illegal, and the system is getting abused because our governments allow it.

People are going under all over. Not just where there is immigration.

[DSRilk]

Why are you so anti-USA?

How does this have anything to do with the US? Do you think Canadians don't get house loans?

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Nobody forced them to take out a mortgage.

They'd still have to pay rent. A mortgage is no different in that regard. It's a monthly fee you need to have money to pay for. Sure, you can move out of a rental, but then you have fees you likely can't afford, and you've just broken your lease making it hard to get a new place...

[callipygoustp]

How does this have anything to do with the US? Do you think Canadians don't get house loans?

Do Canadians tend to borrow as much as the average citizen of the USA does? Has Canada had a housing loan crisis? Honestly, I just assumed the level of personal debt in the USA was an anomaly.

[Tennis]

How does this have anything to do with the US? Do you think Canadians don't get house loans?

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They'd still have to pay rent. A mortgage is no different in that regard. It's a monthly fee you need to have money to pay for. Sure, you can move out of a rental, but then you have fees you likely can't afford, and you've just broken your lease making it hard to get a new place...

Rent is way less. A 2 bedroom is like $1000-1500 a month lets say. A far cry from what a mortgage is gonna cost. Plus the renting fee usually includes electricity, taxes and other utilities.