The banks, the Realtors and the corpos waiting to turn my home into a rental love it this way. I have a small mortgage in Atlantic Canada, when I bought my home there was a lot of pressure to shop near the top of my pre-approval , which was around $600,000. But to the dismay of my realtor I held out, was flexible, and ultimately found a place for less than half that amount.
If I had just went with the flow, I’d be house poor and spending near $2500 a month on the mortgage, plus much higher property tax and maintenance. I’d also be staring at a fixed rate renewal of close to $3500 a month, or already seen my payments climb near that with a variable rate (another thing they tried to push me into when rates were impossibly low).
And none of them would care, not the realtor who took his cut, not the lender who collects the interest and can repo the hard asset, not the corpo that will buy the home up on fire sale and rent it back to me.
As it is, I’ve insulated myself from rate increases up to a certain amount. But that was all my doing, nobody else gave a lick to help with that.
Nobody helps [borrowers] choose an efficient bid price for a house, nobody explains the downside risk of variable mortgages, nobody shows them historic rates or real prices.
Borrowers are adults. They are about to sign a pretty important document, so they should do a few hours of research. Maybe take a book out of the library. Perhaps look online.
Figuring out historic interest rates is not hard. StatsCan and a dozen other websites show rates going back to the 1950s.
Determining what you can pay is a matter of budgeting, or saying “I can afford my current rent, so the mortgage, maintenance, and taxes need to cost roughly the same”.
The level of effort is similar to doing taxes. Most people who should qualify for a mortgage can do the homework.
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The banks, the Realtors and the corpos waiting to turn my home into a rental love it this way. I have a small mortgage in Atlantic Canada, when I bought my home there was a lot of pressure to shop near the top of my pre-approval , which was around $600,000. But to the dismay of my realtor I held out, was flexible, and ultimately found a place for less than half that amount.
If I had just went with the flow, I’d be house poor and spending near $2500 a month on the mortgage, plus much higher property tax and maintenance. I’d also be staring at a fixed rate renewal of close to $3500 a month, or already seen my payments climb near that with a variable rate (another thing they tried to push me into when rates were impossibly low).
And none of them would care, not the realtor who took his cut, not the lender who collects the interest and can repo the hard asset, not the corpo that will buy the home up on fire sale and rent it back to me.
As it is, I’ve insulated myself from rate increases up to a certain amount. But that was all my doing, nobody else gave a lick to help with that.
Everyone involved has a perverse incentive to railroad the buyer into the most expensive house possible. The whole system is rotten.
Borrowers are adults. They are about to sign a pretty important document, so they should do a few hours of research. Maybe take a book out of the library. Perhaps look online.
Figuring out historic interest rates is not hard. StatsCan and a dozen other websites show rates going back to the 1950s.
Determining what you can pay is a matter of budgeting, or saying “I can afford my current rent, so the mortgage, maintenance, and taxes need to cost roughly the same”.
The level of effort is similar to doing taxes. Most people who should qualify for a mortgage can do the homework.
deleted by creator