I want to agree but it also is the homeowner CHOOSING to take three decades to pay it off.
So for the benefit of taking a third of a century, that's the cost.
Keep in mind you are not forced to take the full 30 years. You can pay it off earlier. It really is a restriction on the lender not on the borrower. The borrower can take out a 30 yr mortgage and pay it off in 12 months if they were inclined and able.
Let's say it wasn't a percent. What if the agreement was, you can take up to thirty years to pay off the loan, but so long as the principal hasn't been paid, every month I charge you a flat fee of $X. Would that be acceptable?
Amortization tables can be done for free in one minute on a hundred websites. It's not voodoo. Anyone can do it. We either need to accept that borrowers are responsible for their actions OR decide some people are too fucking stupid to take out debt and also rescind their voting rights, driving privileges, among other things. But we can't have a system where an individual can vote and drink and drive and smoke and own an AR-15, but CANT be expected to understand a the terms of a fucking mortgage.
Lender is only able to charge 20% max over borrowed amount, spread over 360 payments. GAAP rules need to be changed to account for this, as right now banks make money over the term of the loan based on the interest paid by the lender every month, which is also why mortgage interest is front loaded into loan repayment amortization schedules.
This is all ignoring that the government is the one paying the front risk for home loans to begin with. The fact banks have the audacity to charge interest, which was created to mitigate risk they don’t actually incur, makes the entire system redundant and quite literally a socialist creation.
I agree that some of their risk measures are redundant, like PMI in case you can't pay the mortgage, but they can also simply repo the house if you don't pay, what is the point of both?
That said, what is your alternative to them charging interest? What if someone wants to buy a home but doesn't have the funds to pay in full. What then?
Why are the banks charging interest to cover risk that is paid for by the government? When’s the last time banks actually lost money from home loans? Again, we socialized losses for banks but for some reason privatized profit.
That's a series of questions, but not an answer. I can infer, but I'd like you to actually explain the alternative? Just, take the purchase price and divide it by 360 and call it a day? And what if they miss a payment, or don't pay it off in 360 months? Interest controls for all of that.
I want to agree but it also is the homeowner CHOOSING to take three decades to pay it off.
So for the benefit of taking a third of a century, that's the cost.
Keep in mind you are not forced to take the full 30 years. You can pay it off earlier. It really is a restriction on the lender not on the borrower. The borrower can take out a 30 yr mortgage and pay it off in 12 months if they were inclined and able.
Let's say it wasn't a percent. What if the agreement was, you can take up to thirty years to pay off the loan, but so long as the principal hasn't been paid, every month I charge you a flat fee of $X. Would that be acceptable?
Amortization tables can be done for free in one minute on a hundred websites. It's not voodoo. Anyone can do it. We either need to accept that borrowers are responsible for their actions OR decide some people are too fucking stupid to take out debt and also rescind their voting rights, driving privileges, among other things. But we can't have a system where an individual can vote and drink and drive and smoke and own an AR-15, but CANT be expected to understand a the terms of a fucking mortgage.
Lender is only able to charge 20% max over borrowed amount, spread over 360 payments. GAAP rules need to be changed to account for this, as right now banks make money over the term of the loan based on the interest paid by the lender every month, which is also why mortgage interest is front loaded into loan repayment amortization schedules.
Does that mean if the principal is $100, the bank can charge $20? (100+20)
Or does it mean the bank can charge $120? (100+120)
Genuinely asking.
And under what circumstances?
and that is total complete BS too
This is all ignoring that the government is the one paying the front risk for home loans to begin with. The fact banks have the audacity to charge interest, which was created to mitigate risk they don’t actually incur, makes the entire system redundant and quite literally a socialist creation.
I agree that some of their risk measures are redundant, like PMI in case you can't pay the mortgage, but they can also simply repo the house if you don't pay, what is the point of both?
That said, what is your alternative to them charging interest? What if someone wants to buy a home but doesn't have the funds to pay in full. What then?
Why are the banks charging interest to cover risk that is paid for by the government? When’s the last time banks actually lost money from home loans? Again, we socialized losses for banks but for some reason privatized profit.
That's a series of questions, but not an answer. I can infer, but I'd like you to actually explain the alternative? Just, take the purchase price and divide it by 360 and call it a day? And what if they miss a payment, or don't pay it off in 360 months? Interest controls for all of that.