May 11, 2007

HousingPANIC Stupid Question of the Day

Don't you find it humorous that people who rent money from the bank with an interest only mortgage say they "own their home", or are included in the government's home ownership rate?

Note to world - the only people who own a home are the ones who have paid for the asset in full and have no current liens on the property.


Billyboy said...

Even if you haven't paid off your mortgage you are still the registered owner and therefore you are entitled to any equity accumulated due to house price increases.

Possesion is nine/tenths of the law is it not?

Anonymous said...

and if you pay HOA or taxes, then-- even if you own your home, then you're still renting...

Anonymous said...

I love the same bunch who think because their home is paid for it can never be taken away!

Just miss one property tax payment and feel the love!

Mort said...

Note to world - the only people who own a home are the ones who have paid for the asset in full and have no current liens on the property.

Even so, you still need to pay property taxes to keep it. Probably should spend some on insurance and maintenance as well. I sure would hate to be upside down and pay high property taxes too. That would suck.

Jeff said...

I wanted to argue against this as nit picking, but I suppose you do have a point. After all, GMAC wouldn't give me the title to "my" Pontiac until I paid off the loan in full. I didn't really own the car when I still had a loan balance

Anonymous said...

Property tax much?

Even if you've paid off the bank, you still rent from the government.

Don't believe me?

Try not paying your property taxes for a few years then watch as you are evicted form 'your' home.

keith said...

I purposefully said "no current liens on their house" because you are correct - don't pay your taxes or association fees and you'll realize you don't own your house right quick

Anonymous said...

how much of that "home ownership" gain these past few years is people who are on interest only or optoin arms

westwest888 said...

A lot of states have annual property tax on cars too. You can own those outright and still get them taken away.

I must say though, I can respect someone who did a 15 year fixed at under 5%. Anyone out here so fortunate? That's an incredibly low cost of capital.

michael said...

i would have no problem with making property taxes "optional". those who choose not to pay however will have none of the following:

- police protection.
- fire protection
- plumbing infrastructure
- education
- library
- communication infrastructure
- roads
- etc.
- etc.
- etc.

Flagg707 said...

Westwest888 said: I must say though, I can respect someone who did a 15 year fixed at under 5%. Anyone out here so fortunate? That's an incredibly low cost of capital.

I agree with the sentiment entirely. For those that avoided the toxic loan scams and used Greenspan's insane "emergency rates" on the cost of money - as long as those folks have a steady job/income, they got an historic low rate on the cost of their capital.

Granted, HP focuses on the sleazy end of the market, which is much more fun, but great point that we shouldn't lose sight of the fact that in some cases, a chunk of the borrowers shouldn't be in terrible shape, even with the coming long slump in home prices.

Anonymous said...

Your graph is lying with statistics. If the scale (properly) started at zero, the dramatic increase would look far less dramatic.

Anonymous said...

I have about 11 years left on a 15 year loan at 4.9%

Started off with an 8% 30 year loan in 1997. Refi'd to 15 years at 5.9% about 5 years later. About $1500 in fees to save about $110,000 in total interst. A few months later the 15 year rate was down to 4.9%, and my credit union let me lower the rate for a $1000 fee. This saved me about another $11,000 in total interest. No cash taken out during refi, so my payment is about $20 more than it was with the 30 year loan, and I am out of debt 10 years sooner.

Frank said...

A graph showing actual home ownership, not debtorship, would probably be the exact opposite!

Let's not forget the millions of people who really did own their homes free and clear, and then got encumbered in HELOCs and other garbage debt, thus giving up their ownership.

But hey, this is the "look at me" generation, and those boomers are more than happy to hand over their ownership in exchange for a Rolex and Escalade and big screen TV. And the sick part is even after they got buried under HELOCs they continued to look down on renters as 2nd class citizens.

Frank said...

Debt is a nasty beast. It just occurred to me as I was looking at buying a 50" or so flat-screen HDTV for under $2,000 that just a couple of years ago, the homedebtors were buying those same TVs for $10,000, but with HELOC money so they felt like they got the TV for free, since the money was "cashed-out equity." We all know here there is no such thing.

In reality they'll pay over $20,000 for those TVs with interest.

Of course some troll will now post that it's a good deal becuase they get a tax deduction on the interest .... LOLOLOLOL!!!!!

PDX Renter said...

Ah the illusion of private property...

shtove said...

Response to billyboy on owning a mortgaged property - in UK law this is the position:

*the borrower is the registered owner;
*if the lender wants possession, at common law they have a right to go in immediately without the borrower being in default;
*modern legislation allows the court to prevent the lender from taking possession unless there is default, and the court can postpone possession if it's likely the arrears will be cleared within a reasonable period;
*if the lender goes for foreclosure, rather than simple possession, the lender keeps the equity upon sale.

That's the common law situation (probably similar to US law), tempered by statute. I would say it's closer to renting than owning.

pjp said...

I'm starting to realize just what a backwards, outmoded way of living you have.

Ultimately, what is it you want. What exactly does this absolute ownership you so desire mean?

There is nothing you could ever point to, no piece of paper, that can set a social relationship like "ownership" into stone.

You can "own" it all when you're the last person on Earth.

pjp said...

So what you want is a relationship between people that is immutable? That is impossible. What you think is a relationship between things is in reality a social relationship.

There is not a social contract in the world that cannot be broken, including home ownership.

"You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths. You reproach us, therefore, with intending to do away with a form of property, the necessary condition for whose existence is the non-existence of any property for the immense majority of society."

Read that as if you were a mortgage company.

Paul E. Math said...

'Renting' and 'owning' are somewhat false distinctions.

Property is merely a bundle of rights, priveleges and immunities. When you rent you are paying for a certain bundle of rights upon that property. When you own outright you have a certain bundle. When you own with a mortgage you have another bundle and the mortgage lender has a certain bundle as well.

Even when you 'rent', there is a certain extent to which you 'own'. And when you 'own', due to property taxes and mortgages, there is a certain extent to which you 'rent' - your rights on that property are NOT full and absolute.

Anonymous said...

I have a 10 yr mortgage @ 4 3/8. I took it out about 4 years ago. Paid extra most months. Should be debt-free in 18 months. No other debt.

It's all about being a minimalist. How much stuff do we really need? Don't fall for marketing and materialism.

Anonymous said...

"Westwest888 said: I must say though, I can respect someone who did a 15 year fixed at under 5%. Anyone out here so fortunate? That's an incredibly low cost of capital.

I would respect even more if the buyer had a home office to deduct a percentage of payments from income tax, thus realizing bigger savings. The best thing a home owner can do is having a home office to take advantage of tax benefits. By the way, the deduction includes a percentage of utility expenses. Have the gov subsidize your home expenses.