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

[Docturphil]

Yeah but wife is out of work

That sucks. Well hopefully she finds work soon.

[kneehidude]

It really depends on where you are...

Both live in the same area (Northeast Florida).

[Moozart]

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.

You must have had a VERY shitty bank(or flat your fault for not asking), the numbers we got during the buying process of the house we just got were dead on accurate with what my payments are. A good bank is going to figure all that extra shit in for you before you sign the closing papers.

[Glorious Leader]

Because it's very hard to regulate something that's happening that government doesn't really know about, and by the time it becomes a problem is such a humongous problem the government has to step it because the economic consequences of lenders going under would be catastrophic. It's a combination of sneakiness, laziness, fear, and magical thinking. The end result is the lenders stay in business, still make money, and their victims get screwed over.

Not just that. The banks lobby to have regulations and regulators essentially handicapped. Actually it's even worse. The regulators suffer from intellectual capture. They agree on some level that the banks should be predatory.

[xero5141]

Ok. No matter what I do or say, it won't change your opinion. Since you'll never listen to me, might I suggest that you listen to people who are credible?
There are a lot of financial resources out there, internet, youtube, books (which you can likely pick up at your local library for free, like I did), etc. I suggest taking a look into them

You can call it an opinion, that doesn't make you correct. You didn't answer my question for obvious reasons, you can see yourself out now.

[Deleted]

There's 0 need for jobs and money? How are you going to get food? How are you going to find shelter? Who is going to make your clothes and where are you going to get the materials from? You're plan is to hope the exact right percentage of people will go into each career and do those jobs because they love doing them? What percentage of people will build those restaurants just because they enjoy it? What percentage will serve you, just because they enjoy it? What percentage will clean up the trash and the sewage you generate just because they enjoy it? What percentage will clean out clogs in the sewer system just because they enjoy it? And you think only a FEW people would sit on their butts all day? That's really generous. And some people just love stocking shelves in the grocery store? The exact right percentage to map to the needs of the nation, apparently? I'm sorry, but this is the most poorly thought out approach to life that I think I've ever seen.

I understand this is an abstraction level not many people can grasp as it requires you to let go everything you know about society. The same as what i mentioned would apply. But you also forget there would not be such a high demand for things like clothes. The only reason we wear so many cloths and so many cloths need to be fabricated in sweatshops = fashion & (again) profit. What is fashion? A made up marketing trick to make consumers buy more. "dont wear this, its last year, buy this instead!" Why? Profit for clothing brands. You are forgetting the supply and demand line is heavily focused on what society tells us is in, needed or hip.

You are also underestimating how many people love to build things. What you perceive to be a fun job isnt for others. For instance, being a farmer earns u jackshit and its hard work. Yet we have millions of farmers around the world. And whats more important: boring jobs would be automated quickly. You know we can aready automate most things right now, right? Nobody has to produce clothing anymore. Nobody has to stack lids on jars. Why didnt we automate this yet? Because a system like that is a big investment and people still need jobs for money. Again, money and profit. Basicly the same reason we didnt supply every home with solar panels yet to ban out fossil fuels. Its possible. But its not profitable.

If you are interested you can check out https://www.thevenusproject.com/resource-based-economy/.

We live in an odd working society where people let other people die from disease whom live outside their factory where the antidote is made. Why? Profit. For who? Not you, not me, not the factory workers, for 1 guy at the top.

[Deleted]

"By nature" plenty of people get what they don't deserve-both good and bad.

Please google "Karma".

Spend all summer gathering nuts and then have the tree you stored them in get struck by lightning.

Karma in action. Those nuts in the tree are the nuts you ate but did not deserve in the past.

(Hint: Karma theory only works if you believe in reincarnation)

[Tennis]

Are you so bored you have to ask inane questions that are far too broad to answer? Why do people do drugs? Why do people overeat?

Maybe some people on here can share first hand experiences.

[Nasuem]

Maybe some people on here can share first hand experiences.

So you're saying you have never had an indulgence that was a net negative on your life?

[Tennis]

So you're saying you have never had an indulgence that was a net negative on your life?

No? I've paid off my credit cards every time but once if memory serves correct. The one time was a mistake on the numbers.

[Total Crica]

So you're saying you have never had an indulgence that was a net negative on your life?

They indulge in the thought that everyone should want to be alive for the same reason they want to be. That is clear every time they post.

[Nasuem]

No? I've paid off my credit cards every time but once if memory serves correct. The one time was a mistake on the numbers.

Jesus Christ this isn't rocket science. People buy houses they can't afford for the same reason they buy anything else they can't afford. The same reason people eat things their health can't afford. Smoke things their lungs can't afford. One, it gives them a rush in some form or another. Two, they have bad impulse control.

I just don't understand how someone who is a human doesn't put this together. Which leads me to believe you just wanted to tell everyone how level headed you are for some sad, sad reason.

[Uvwaex]

It should be illegal for 3 generations to live under one roof? Why?

I also don't see immigrants flooding our housing market. Most poor immigrants I know of rent or live in government assisted housing. They're not out here buying houses. And it's not like our "rich" neighborhoods are flooded with well off immigrants. The majority in my area are white upper middle class with a few asian-ethnicity outliers.

What I didn't get was how 3 generations only increasing housing demand by 1 was somehow worse than them increasing it by 3...
Remember, only the poor can raise prices and take people's possible earnings. Never the rich or middle or upper middle class...

[Nasuem]

They indulge in the thought that everyone should want to be alive for the same reason they want to be. That is clear every time they post.

Who is they? I don't understand why you quoted what I said. I understand what you were going for, but no one thinks everyone should only enjoy what they enjoy. The point is that everyone has their thing they enjoy that is negative on their life. They may not indulge in it, but we all have it.

[Clevername]

From what i see from many of the self righteous in this forum they do not use credit at all and pay cash for everything. If you can do so cheers, most of us have to at some point take loans for education, vehicles, housing, medical, etc. and unfortunately many do not practice enough restraint with using credit.

I myself bought very modestly with my first two homes and sold both for a profit but that's really only because more sq. feet = more cleaning and i hate cleaning. I cam honestly say that is one time in my life my laziness was beneficial.

[Total Crica]

Who is they? I don't understand why you quoted what I said. I understand what you were going for, but no one thinks everyone should only enjoy what they enjoy. The point is that everyone has their thing they enjoy that is negative on their life. They may not indulge in it, but we all have it.

And I pointed out their indulgence that you asked if they had. (tennisace, the poster you quoted)

[Uvwaex]

You must have had a VERY shitty bank(or flat your fault for not asking), the numbers we got during the buying process of the house we just got were dead on accurate with what my payments are. A good bank is going to figure all that extra shit in for you before you sign the closing papers.

For a period before the crash, adjustable rate mortgages were very popular. You would start at a low rate, but it could go up (or down) based on the market. Since house prices kept going up and up, so did the mortgage. This lead to people refinancing to get the equity now in the house to pay those higher monthly payments. However, once the crash happened and the interest went down, the equity of the house had already been spent on the bubble. Now you've been paying monthly payments that started at a total of 300k, went up to 600k, and your house is now worth 100k if that with all your equity gone, so you cant borrow anymore and are finally stuck with a mortgage that might still have a high interest rate, you're not in charge of that. In fact, the banks are going to need more money since they've lost so much in the crash.

This is kind of a bad explanation but I think the adjustable rate hype is probably why your experience is with a very predictable and precise number. You should check though, im sure you have a fixed rate 30 year or whatever. You can refinance these of course, but your interest rate isnt liable to change with what the bank chooses. Anyway, fixed is the way to go clearly, but adjustable rate did get many people leading up to the crash.

The proof is in the pudding kinda, the crisis was over lending essentially. Adjustable rates made present costs lower than they should have been to entice people, and made the money on the back side. Or at least would have. This doesn't at all go into the kind of bonds and mortgage tranches either.

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From what i see from many of the self righteous in this forum they do not use credit at all and pay cash for everything. If you can do so cheers, most of us have to at some point take loans for education, vehicles, housing, medical, etc. and unfortunately many do not practice enough restraint with using credit.

People should consume less so they dont have debt! But keep buying the things my manufacturing jobs makes cause I cant lose it!

[Felicia]

My husband and I haven't bought a house yet, and we still get the entire thing from both sets of parents. Except my husband is in the Navy, and gets BAH (basic housing allowance) per month which covers pretty much anything in our area. My parents (dad was Navy, too. BAH covered mortage) bought a nice house out in rural Virginia back in the early 90s before a GIANT population boom. I think they bought it for 100k, sold it for 600k 15 years later.

We still live in base housing, mostly because it's actually rather nice and in the center of town. Most condos and townhouses where we're at (Northwest WA state) are super expensive for rent, and buying a house up here is no different. So the Navy just takes our BAH and we live in a nice townhouse. It's a lot cheaper :P Also helps with the entire 'transient thing' when we need to move. We can break our 'lease', and there are no fees. Just have to pay for house clean up and all that crap. It varies by area though. Whidbey Island has nice base housing.

[nomorepriest]

I take out loans for leverage and making more money than the cost of the loan.

[Total Crica]

People should consume less so they dont have debt! But keep buying the things my manufacturing jobs makes cause I cant lose it!

Many giggles, thanks!