Credit risk v tenant risk are two different assessments though. I get the point and the vibe but if people can’t notice this nuance, they have no business buying assets imho
I am all about discussing the inherent issue here but not noting risk analysis factors like this is disingenuous bait.
Rent payments aren’t reported to collection agencies so you’re absolutely correct, credit risk is a horrible metric risk to use when tenant risk could instead be used. I’m so glad you understand the on-time payment of rent is a much better way to determine whether or not someone can afford to a pay a mortgage, much less a mortgage with a lower premium. Credit risk is a bullshit metric that shouldn’t be used for mortgages at all; bank statements proving income and rent payments as well as whatever tenant letters you can scrape out of landlords are much better indicators.
If you think the history of money going to keep a roof over someone’s head is worse than a made-up, opaque number that is explicitly intended to benefit those with capital, you have no business talking about real people and should go back to talking about the stock market.
credit risk is a horrible metric risk to use when tenant risk could instead be used.
I don’t disagree with this statement but the formulas are set around “credit risk” and nobody got around to tracking “tenant risk” because that’s our society is structured.
Either way, people who own property want it this way.
You are implying a lot of things about how I think, which a quick background check would resolve btw.
You said that people that don’t understand the different between credit and tenant risk have no business buying assets. Either you are very bad at communicating or you don’t understand that most people can’t afford to look at a home as asset. That’s a very upper middle class and beyond perspective, similar to a car being an asset. They have utility; they are not financial instruments.
fair… i still stand behind that point too. i just don’t think rent seeker mortgage originator should be making that call since neither them or investor carries the risk, FHA and VA loans are backed by Daddy Sam, so why are they not front ending it?
Most sellers will take anything else before VA or FHA loans and most buying agents will try to get you away from them. Most sellers will also take cash over a loan, often even if the loan is a higher amount. I’m assuming a tight market like exist in most big US cities; reasonably priced houses go very quickly still in many places.
I don’t know why the real estate conventional wisdom goes against the loan; it really frustrates me and limits accessibility.
When you take a mortgage, that is a secured loan, meaning the bank owns the house until you’ve paid it off. Additionally, if you don’t put 20% down, the bank requires you to carry mortgage insurance. Listen to landlords tell it, and tenants can basically stay in a house for months or a year without paying rent, all the while damaging the house. I don’t really understand why a mortgage with a lower monthly payment is harder to qualify for than rent would be.
Being a secured loan doesn’t mean the bank owns the house. You own the house, the house is collateral. There maybe terms on the loan, like requiring insurance, but still, your name is on the deed. Only you can decide to paint it or redo the bathroom, etc. the bank can take possession if you fail to pay, but until that point it is yours.
Tomato/tomato. The bank paid almost all of the money to the seller. If you stop paying the mortgage, the bank will take legal possession of the house and sell it to recoup its money. You may be able to paint it, but the bank owns it in the most important sense of the word.
I can’t disagree more with your last sentence. Seems more of an emotional framing than anything. I can’t think of a single way that the bank shows ownership over my home over myself.
Are you just upset you can’t stop paying for the house and keep it?
I’m not upset about anything. I just don’t see how something is “yours” if you’re still paying for it. Like, I guess it’s partly yours, but it’s mostly the bank’s for a long time.
Well see, I made a deal with a bank, that said I would like to borrow, say 100k, and I would be willing to pay it back over 30 years plus extra, or else the bank would have no incentive to do it.
Separately, they said they would be far more comfortable loaning me money, if I could guarantee that if things went south, there was some sort of asset they could take besides my money.
It didnt have to be my house, it could have been something else THAT I OWNED. Thats the important part. The house is only collateral because I own it, despite the outstanding mortgage payment.
Edit to add: this is also why I would keep the profits from selling my house, and would only have to pay off the loan.
Yes, I understand what collateral is. It’s something the bank owns, but allows you to use until you’ve paid it off. For example, the bank keeps the title to my car until I’ve paid it off, and then they send me the title.
Credit risk v tenant risk are two different assessments though. I get the point and the vibe but if people can’t notice this nuance, they have no business buying assets imho
I am all about discussing the inherent issue here but not noting risk analysis factors like this is disingenuous bait.
BTW that’s a tracking link, here is a clean one:
https://www.reddit.com/r/boringdystopia/comments/1e0f8sv/a_mother_of_three_says_her_family_cant_secure_a/
Rent payments aren’t reported to collection agencies so you’re absolutely correct, credit risk is a horrible metric risk to use when tenant risk could instead be used. I’m so glad you understand the on-time payment of rent is a much better way to determine whether or not someone can afford to a pay a mortgage, much less a mortgage with a lower premium. Credit risk is a bullshit metric that shouldn’t be used for mortgages at all; bank statements proving income and rent payments as well as whatever tenant letters you can scrape out of landlords are much better indicators.
If you think the history of money going to keep a roof over someone’s head is worse than a made-up, opaque number that is explicitly intended to benefit those with capital, you have no business talking about real people and should go back to talking about the stock market.
I don’t disagree with this statement but the formulas are set around “credit risk” and nobody got around to tracking “tenant risk” because that’s our society is structured.
Either way, people who own property want it this way.
You are implying a lot of things about how I think, which a quick background check would resolve btw.
You said that people that don’t understand the different between credit and tenant risk have no business buying assets. Either you are very bad at communicating or you don’t understand that most people can’t afford to look at a home as asset. That’s a very upper middle class and beyond perspective, similar to a car being an asset. They have utility; they are not financial instruments.
fair… i still stand behind that point too. i just don’t think rent seeker mortgage originator should be making that call since neither them or investor carries the risk, FHA and VA loans are backed by Daddy Sam, so why are they not front ending it?
Most sellers will take anything else before VA or FHA loans and most buying agents will try to get you away from them. Most sellers will also take cash over a loan, often even if the loan is a higher amount. I’m assuming a tight market like exist in most big US cities; reasonably priced houses go very quickly still in many places.
I don’t know why the real estate conventional wisdom goes against the loan; it really frustrates me and limits accessibility.
Cash buyer always asks for that discount though, u should know that ;)
When you take a mortgage, that is a secured loan, meaning the bank owns the house until you’ve paid it off. Additionally, if you don’t put 20% down, the bank requires you to carry mortgage insurance. Listen to landlords tell it, and tenants can basically stay in a house for months or a year without paying rent, all the while damaging the house. I don’t really understand why a mortgage with a lower monthly payment is harder to qualify for than rent would be.
Being a secured loan doesn’t mean the bank owns the house. You own the house, the house is collateral. There maybe terms on the loan, like requiring insurance, but still, your name is on the deed. Only you can decide to paint it or redo the bathroom, etc. the bank can take possession if you fail to pay, but until that point it is yours.
Tomato/tomato. The bank paid almost all of the money to the seller. If you stop paying the mortgage, the bank will take legal possession of the house and sell it to recoup its money. You may be able to paint it, but the bank owns it in the most important sense of the word.
I can’t disagree more with your last sentence. Seems more of an emotional framing than anything. I can’t think of a single way that the bank shows ownership over my home over myself.
Are you just upset you can’t stop paying for the house and keep it?
I’m not upset about anything. I just don’t see how something is “yours” if you’re still paying for it. Like, I guess it’s partly yours, but it’s mostly the bank’s for a long time.
Well see, I made a deal with a bank, that said I would like to borrow, say 100k, and I would be willing to pay it back over 30 years plus extra, or else the bank would have no incentive to do it.
Separately, they said they would be far more comfortable loaning me money, if I could guarantee that if things went south, there was some sort of asset they could take besides my money.
It didnt have to be my house, it could have been something else THAT I OWNED. Thats the important part. The house is only collateral because I own it, despite the outstanding mortgage payment.
Edit to add: this is also why I would keep the profits from selling my house, and would only have to pay off the loan.
Yes, I understand what collateral is. It’s something the bank owns, but allows you to use until you’ve paid it off. For example, the bank keeps the title to my car until I’ve paid it off, and then they send me the title.
You know what, the way you said it this time just really clicked. I now also hate banks. Good talk.
Correct and great point. In fact, most loans, such as VA and FHA are daddy sam backed up. So you have make a good point where is the risk for these?
LMAO, how are they different. They’re both paying off mortgages the only difference is that they’re paying off yours and not their own.