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Danes Get 20-Year 0% Mortgages

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Re: Danes Get 20-Year 0% Mortgages

#251

Post by refurb »

namdnay wrote: post #197
patatino wrote: post #99

Earlier quoted context omitted.

Well, I can't talk about Geneva or Zurich because both cities are very expensive. But generally, prices are going up, the down payment is normally 20% of the price. This is one problem, another one is how they calculate the risk. The "law" is you have to be able to pay the mortgage at 5% and that 5% cannot be more than 1/3 of your income. So if you buy a 1.25m house and take a 1m mortgage 5% is of that is 50k, so you…

1/3 of your income OK, but why 5%? Are these variable rate mortgages?!

Canada does something similar. To avoid buyers “biting off more than they can chew” with an ultra-low variable rate mortgage (where the rate might double or triple in 5 years), buyers have to qualify for a LIBOR+5% (I don’t remember the exact formula) mortgage as well.

Re: Danes Get 20-Year 0% Mortgages

#252

Post by legulere »

GreeniFi wrote: post #32
cesis wrote: post #24

Earlier quoted context omitted.

Central Banks can enforce negative interest rates. https://en.m.wikipedia.org/wiki/Negative_interest_on_excess_...

Sheeesh. Bad news for entrepreneurship. As due to mortgage lending rules, it’s very difficult to get a loan as a business owner rather than an employee with steady, bankable, salary

Corporate bonds are also at a record low, even so much that there’s talk of an increasing rate of zombie companies that just stay alive because of loaned money and will collapse as soon as interest rates will go up again.

Re: Danes Get 20-Year 0% Mortgages

#253

Post by yazaddaruvala »

AnimalMuppet wrote: post #176
asiando wrote: post #148

Earlier quoted context omitted.

> The price alone is mostly irrelevant for the buyer. Sorry but wow. This is not the kind of comment I expect on HN, but rather from my uncle: “We got this new Lexus, it’s only $500/month!” “Yes, for 200 years”

But it is in fact how the majority of home buyers operate. "Can I afford it" translates into "can I afford the monthly payments", not "can I afford the total purchase price". I saw this vividly when I bought my first house. It cost $61,000. My mortgage was at 9%. Two years later, mortgage rates had dropped to 7%, and my house was worth 90,000 (state appraised value). If I had bought the exact same house two years lat…

I'm sure most of you are well aware, but for anyone reading that isn't aware of the nuance:

> is monthly expense of renting vs monthly expense of buying

Note: "monthly expense of buying" is very different than "monthly cash flow of buying".

The "monthly expense of buying" is the monthly interest paid, taxes, and maintenance.

The "monthly cash flow of buying" is the monthly mortgage paid (principal and interest), taxes, and maintenance.

When deciding to buy a space, you need to use the "monthly cash flow" to ensure you don't default on the loan. When comparing buying vs renting a space, you need to use the "monthly expense".

Re: Danes Get 20-Year 0% Mortgages

#254

Post by icedchai »

adewinter wrote: post #193
stevehawk wrote: post #187

Earlier quoted context omitted.

You expect people on HackerNews to not accurately represent how society views something? There's a reason why the phrase "what's my monthly?" is a thing. Car dealers pushing 7 to 8 year loans is because people are worried about their "monthly." Same for rent-to-own places, mobile companies, and everyone else in the lending business.

When I decide to buy a $25k car because that's as much as I'm willing to spend I still need to determine what my "monthly" is. It matters what my monthly is because it is _a loan_ that I need to pay back every month. If I didn't need to think about what the monthly payment was I wouldn't need to take out a loan (unless I guess you got a magical loan that could only be paid off as a lump sum?). You're implying "worryi…

The point is the total loan amount is mostly irrelevant if the term is flexible. It used to be that 6 or 7 year car loans were basically unheard of... 3 or 4 years was the norm.

Another example is most people never pay off their mortgage. Some refinance, often several times, resetting the term. Eventually they'll sell the house, pay off the mortgage as part of that transaction, and keep the change (if they're lucky.)

Re: Danes Get 20-Year 0% Mortgages

#255

Post by [deleted] »

sokoloff wrote: post #57
andechs wrote: post #31

Earlier quoted context omitted.

The tax deduction on mortgage interest is one of the most regressive pieces of tax policy. Those with more expensive housing benefit more from the credit. Non-homeowners do not benefit at all, and renters tend to be poorer than homeowners.

Renters are living in housing which is itself eligible for business loan deductions. If you believe that landlords use the cost of holding real estate as an input that shapes the supply side of the supply-demand balance in the broad rental market (as I do), then it seems that renters do indirectly benefit from the deductibility of the loans on the buildings in which they live. The mortgage interest deduction serves t…

[deleted]

Re: Danes Get 20-Year 0% Mortgages

#256

Post by StillBored »

jseliger wrote: post #162
patatino wrote: post #99

Earlier quoted context omitted.

Well, I can't talk about Geneva or Zurich because both cities are very expensive. But generally, prices are going up, the down payment is normally 20% of the price. This is one problem, another one is how they calculate the risk. The "law" is you have to be able to pay the mortgage at 5% and that 5% cannot be more than 1/3 of your income. So if you buy a 1.25m house and take a 1m mortgage 5% is of that is 50k, so you…

But generally, prices are going up This can be resolved any time cities want to build a lot more housing: https://www.theatlantic.com/ideas/archive/2021/01/anti-growt... . Outside of Tokyo: https://news.ycombinator.com/item?id=16704501 , no or very few cities in the Industrialized world have chosen to simply build lots of housing, which will tend to bring prices down towards the cost of construction.

Its not really helping places like Austin TX. All that happens is the developers move a couple miles further outside of town build a bunch of houses, usually for what works out to be roughly equal to the cheapest house in town. Repeat the process next year. Within a few years everything doubles. So the housing market is inversly priced by distance from downtown and the lakes. Sure you can get a house for $250k, but your likely looking at sitting in your car for 3 hours a day. If you can handle a million $'s you can probably live 10-15 mins away from your work. If you have a few million you might even get a nice place.

Re: Danes Get 20-Year 0% Mortgages

#257

Post by ryandrake »

DavidPeiffer wrote: post #240
adewinter wrote: post #193

Earlier quoted context omitted.

When I decide to buy a $25k car because that's as much as I'm willing to spend I still need to determine what my "monthly" is. It matters what my monthly is because it is _a loan_ that I need to pay back every month. If I didn't need to think about what the monthly payment was I wouldn't need to take out a loan (unless I guess you got a magical loan that could only be paid off as a lump sum?). You're implying "worryi…

>You're implying "worrying about" or wanting to know what the monthly payment is on a loan is a bad thing and I don't understand why. I stopped into a car dealer to look at a vehicle a couple years ago. I liked how it drove, could pay cash, but wasn't opposed to taking out a loan if I could get a better price overall (sometimes possible with fees banks pay to used dealers for getting a loan originated). In my experie…

Exact same experience here. The salesman (and his manager, lol) just couldn't grok that I don't care a shred about what monthly payment they can math their way into. I'm looking at the total price of the car. It was like we were speaking totally different languages. Even after I tried to explain it with "Let's assume I'm going to pay cash..." they kept trying to steer me into their finance department. Obviously they make more money on the financing than they do selling the car itself. I basically won't go to a dealership anymore.

I did my house shopping the same way. For some reason realtors are a lot better about negotiating the actual sale price than car dealers are. I never really had a realtor try the "So, tell me about your maximum monthly payment!" pitch on me, probably because you're expected to have your financing lined up before you shop.

If you're going in to buy something with a "max monthly I'm willing to pay" in mind, you are setting yourself up for a really bad deal.

Re: Danes Get 20-Year 0% Mortgages

#258

Post by nemo44x »

yrimaxi wrote: post #246
nemo44x wrote: post #204

Earlier quoted context omitted.

I've come to terms with the fact that in most markets a home is not the best way to use your money in terms of return. However, you get to live in it and that's priceless. And like you said, it acts as a savings account over time and that generally works out as people will eventually downgrade after their kids have left. Another nice thing about owning a home is you can improve it (additions, adding bathrooms, etc) a…

The point of most things that you can buy should be the thing itself, not its investment-value. If not there is probably rent-seeking going on, i.e. a market failure. All things degrade due to entropy. Things cannot truly become more valuable by themselves.

Land?

I think raw land is one thing that can become valuable on its own. Of course billions of years from now it will be gone.

Where I live the land is very much a big part of the cost of the home. The structure is worth what it would cost to demolish plus rebuild it minus existing wear and tear/needed repairs I figure. The value of the structure doesn’t appreciate as fast as the land it is on due to degradations as you’ve pointed out and materials/labor usually not increasing as fast as appreciating assets which the land itself is. Of course in many locations the structure is worth more than the land it is on.

Hence location being the most important part of the equation as any real estate agent will tell you.

Re: Danes Get 20-Year 0% Mortgages

#259

Post by ryandrake »

ProfessorLayton wrote: post #102
tibbon wrote: post #69

Earlier quoted context omitted.

In competitive markets, the issue isn't getting the loan - it's getting an offer accepted. Sellers will heavily favor a cash offer, as it's faster and far more assured of going through. One strategy I've heard about people doing is to take a pile of cash, acquire the property, and then refinance it pulling out 80% of what they put in so that they can both have a mortgage and have a stronger buying position. Add in th…

>What's weird about it to me is that this is one of the few places in US consumer markets where the seller cares deeply about your method of purchase and where the money came from. Often times sellers are trying to buy another home and have put a contingency offer (depending on the market) on another home, so they're heavily incentivized to accept an offer that moves quickly so that they can close sooner. A tiny bit…

When I was house shopping almost a decade ago during the latest seller's market frenzy, there were several cases where our offer (needing financing) was by far the highest dollar amount, but we lost out to someone offering less in cash and no contingencies. We put offers out on dozens of houses, and always got beaten by an all-cash buyer. Our agent urged us to consider no contingency offers in order to give us a fighting chance against all the all-cash buyers.

Re: Danes Get 20-Year 0% Mortgages

#260

Post by icedchai »

yazaddaruvala wrote: post #253
AnimalMuppet wrote: post #176

Earlier quoted context omitted.

But it is in fact how the majority of home buyers operate. "Can I afford it" translates into "can I afford the monthly payments", not "can I afford the total purchase price". I saw this vividly when I bought my first house. It cost $61,000. My mortgage was at 9%. Two years later, mortgage rates had dropped to 7%, and my house was worth 90,000 (state appraised value). If I had bought the exact same house two years lat…

I'm sure most of you are well aware, but for anyone reading that isn't aware of the nuance: > is monthly expense of renting vs monthly expense of buying Note: "monthly expense of buying" is very different than "monthly cash flow of buying". The "monthly expense of buying" is the monthly interest paid, taxes, and maintenance. The "monthly cash flow of buying" is the monthly mortgage paid (principal and interest), taxe…

Yep. That rent you pay is money you'll never get back. At least when buying you have a decent shot of someday recovering the principal (unless you bought at the peak and there's another housing crisis.)
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