Why Are People Dumb Enough To Take Out Home Mortgages, Anyway?
Posted on 04. Dec, 2011 by admin in Uncategorized
I bought my first home with cash. I had saved up $105,000, and I decided: this is either a down payment for a fairly nice house, or it’s the FULL payment for a house that I can fix up and improve.
In the end, I went with the fixer-upper. I DID fix it up and three years later, I sold the property for $250,000. I used $185,000 of that to purchase another fixer-upper, and it has also gained value since then. I don’t plan to move soon, though, since the area is nice.
Why do so many people take out mortgages in the first place? It seems like a huge scam to me. It’s just a way for a big corporate bank to rip you off. You pay interest to a bunch of banksters, and if you fall behind, the banksters get to grab your house. Even though the “money” used to create your mortgage was created out of thin air by the bank using something called “fractional reserve lending” (I’m not kidding – look it up).
Why are so many Americans dumb enough to fall for these kinds of obvious scams? I don’t get it.
29 Responses to “Why Are People Dumb Enough To Take Out Home Mortgages, Anyway?”
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El Tecolote
04. Dec, 2011
Because the banks allow it.
shindype
04. Dec, 2011
You are the exception. Mortgages are the only way most people can buy a house.
smkeller
04. Dec, 2011
Do you really think everyone can be like you?
john
04. Dec, 2011
Because they want the quick fix, and will take anything that is given to them. People aren’t smart when they get out of highschool. When they lay around for a couple years, they only get dumber. So its really a lack of intelligence, no other reason.
Teekno
04. Dec, 2011
It’s not a problem as long as you don’t fall behind.
I have never let a real estate agent or a banker tell me how much house I could afford. I work that part out myself.
Sid
04. Dec, 2011
cause most of us cant even save up 1000$
buffalo dog
05. Dec, 2011
yeah uhhh i’m pretty sure your poop stinks…..
Rainbow Pridey
05. Dec, 2011
$105,000 wouldn’t get you an outhouse here.
El Marxista
05. Dec, 2011
As shindy said, you’re an exception, to save up that much money it would take years, and in the mean time you’d have to rent out some crap. Most people can agree it’s better to get a good house and pay it off while you’re living in it.
Dreaded Rear Admiral
05. Dec, 2011
Yes and no.
I bought a house with 20% down, but well within my means. Two refinances and 13 years later, I paid it off. No creative financing. No dipping into the equity to pay off other debt because I had none.
A home mortgage is perfectly acceptable as long as one doesn’t get employ esoteric methods to purchase a house one knows perfectly well is beyond their means.
Very few can pay cash for a house, but those who cannot muster the 20% or bank on their house appreciating are foolish to even enter into the deal. Customers and banks * both * are guilty of torpedoing the market.
All sorts of deals were dangled in front of me. Even with my two refis, I never did anything other than a no-nonsense, fixed-interest loan.
willie
05. Dec, 2011
and the system screwed you. not only did you pay cash, but many who defaulted had part or most of their debt forgiven and a free home to boot. i’ve seen it. i did almost the same thing. put half down and financed the rest till it was paid off. my neighbor has a better home and he almost lost it but got some sort of grant and now he’s got it almost paid off. ridiculous.
Ted
05. Dec, 2011
Here’s why: not everyone has saved up $105,000; also, when I bought, the market had crashed, so it was advantageous to get it on it. You can always pay off a mortage early, which I plan on doing.
josh
05. Dec, 2011
Spoken from a true 1%er
bluechri
05. Dec, 2011
Because renting sucks
With all the money people pay into rent they could buy a house twice over sometimes .
Mortgages represent a hope to own .
Not many people these days can even hope to save that amount of money BTW.
Fed Up MacAlpin
06. Dec, 2011
Because that’s the only way most people can afford a home. Most don’t have the luxury of being able to pay cash.
Ding fries are done.
06. Dec, 2011
i took out a mortgage because i didn’t have 166K on hand.
Love.Can
06. Dec, 2011
I don’t know about where you are, but a mortgage is the cheapest form of borrowing, which can be invested for about 3% more than it costs.
A smart man doesn’t work for money, he lets the money work for him…
Best time to pay off a mortgage? Never!
barbroxu
06. Dec, 2011
It’s not that they’re dumb enough, it’s that they don’t have enough money. A majority of Americans (I would say 99% but I don’t want to be cliche lol) cannot save up that much money. My family is struggling, and though we can pay the bills and afford a few little luxuries, there is no possible way we could save up over $100,000, let alone even $5,000. Yeah, it’s a HUGE ripoff, but that’s the only way most people can buy a house.
Levi
06. Dec, 2011
I just bought land and built my own cabin. Much more affordable and nice not to be a debt slave :p
Vanessa Wagner
06. Dec, 2011
Not everyone has that much in savings. But then even with no mortgage you CAN still lose a house. Just stop paying your taxes.
Bullet
06. Dec, 2011
There is noting wrong with having a mortgage if you don’t buy more house than your income will allow. We had a mortgage on our first house and never had a problem. We retired, sold our house and paid cash for our new present home.
It is almost 2700 sq ft. and is valued at $136,000 in North Texas. In many parts of the county you get an outhouse for that sum.
Auntie Anne Arkey
07. Dec, 2011
Not everyone can save up that kind of money and not everyone is handy enough for a fixer-upper. Nowadays, you wouldn’t be able to buy your first house with ‘cash’ as you did — Homeland Security would be up your butt so fast.
cosmo
07. Dec, 2011
If your mortgage payment is comparable to what you were paying in rent, it’s a reasonable deal.
Mike W
07. Dec, 2011
Mortgages are the only way most people can buy a home these days. There are plenty of places where I could pay cash for a house, and they all have one thing in common. I don’t want to live there.
Lenny
07. Dec, 2011
How many decades will it take a married guy making $40,000 per year to save $100,000 if his rent, food and transportation expenses are $35,000 ?
Will his land-lord be happy?
zuma
07. Dec, 2011
How do you finance your own Business,..that’s the same fellas(bankers)?..If you’re too scared to finance a Business..How can you Create jobs,..Caveman…it’s all about you Caveman..Who ate the Bluberry Pie caveman..You got bluberry all over your Face..
wtinc
07. Dec, 2011
I do not believe you that you saved up enough to pay for a home unless your about 60.
Lake M
07. Dec, 2011
People are very bad at saving, we are naturally draw to short term gain, but that’s some impressive saving on your part.
electric
07. Dec, 2011
The question is why do so many people take mortgages they cannot afford or do not understand the terms and conditions of. Just because the bank or some government agency says they will lend you $XXX, does not mean you have to take it. There are other ways, that usually involve planning and sacrifice to purchase a home.
My first place was a HUD home double built in 1810. Worked on it 12 years with the rent paying all my mortgage and rehab costs. I bought a modest ranch after that, and paid it off in 9 years. Houses are for shelter, not an investment. I never had a mortgage payment above $365.32/mo. (just looked it up).