Comment on A conundrum

• gandalf_der_12te@discuss.tchncs.de ⁨3⁩ ⁨weeks⁩ ago

  the deposit is the keep young, inexperienced and glowy-eyes people from making commitments they don’t have the stamina to handle.

  it happens a lot that 20 year olds want to buy a house with their new partner that they think they’re gonna be together with for the rest of their lives, only to have it all fall apart 5 years later. forcing to you save up a bit before actually buying the house means you go through a lot of experiences before you actually buy a house, which makes it more likely that you’ll have the far-sightedness that’s needed to actually buy a house.

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  • boonhet@sopuli.xyz ⁨3⁩ ⁨weeks⁩ ago

    That’s one thing, but there’s definitely a factor of “if there’s a market downturn AND we have to foreclose, we don’t want to lose too much”.

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    • merc@sh.itjust.works ⁨3⁩ ⁨weeks⁩ ago

      The house you’re buying is the collateral for their loan. If you took out a loan for 100% of the value of the house and are immediately unable to make payments, the bank then owns the house. For them to simply break even, they’d have to sell the house for more than you paid for it to cover the various costs (lawyers, agents, etc.) If the reason you’re unable to make payments is that the economy crashed and housing prices tanked as a result, the bank couldn’t hope to break even on their loan.

      The down payment is basically a way to ensure that in the bank’s worst case scenario they still don’t lose money. In theory, the bigger the down payment, the lower the risk for the bank, and the better a rate you should get on the loan. Multiple banks should all be trying to be the one to give you a mortgage, and should be trying to compete by shaving their margins as tight as possible given their risk tolerance. Of course, it doesn’t always work out that way, but there’s a reason for what they’re doing and it’s not just to screw over their customers.

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      • boonhet@sopuli.xyz ⁨2⁩ ⁨weeks⁩ ago

        They can’t really ensure a positive worst case scenario. 15% is the minimum down payment where I live unless you use extra collateral, but a home could lose half its value if there’s a major economic downturn.

        They’re just mitigating bad scenarios, not anything close to the worst case.

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  • LodeMike@lemmy.today ⁨3⁩ ⁨weeks⁩ ago

    Not necessarily young but inexperienced yes

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