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FITM-K t1_j6xxfmt wrote

I'm not an expert, and honestly I think a lot of this would need to be federal because this is a problem everywhere, not just in Maine. But some things that I think we could do:

  • Raise taxes massively on corporations that own housing
  • Raise taxes massively on individuals that own housing they don't live in at least part of the time.
  • Lower taxes for homeowners who live in the home they own, provided their income is below a certain level
  • Increase the amount of available housing by funding affordable housing development
  • Create new lower cost loan programs for first-time homebuyers, or perhaps even any home buyers who are looking to purchase a primary residence (i.e. a place they will live rather than rent)

More hardcore/probably harder to accomplish:

  • Create some kind of law (I have no idea how this would work) to make it harder for banks or at least government programs to deny loans to people if their monthly mortgage payment would be the same or lower than the rent they're currently paying. (I've heard so many stories of people who are paying over $2,000/month in rent being told by a bank that they can't afford a $1,500/month mortgage)
  • Outright ban for profit organizations from owning housing for rental. Existing companies would have to be bought out.
  • Implement universal healthcare so that when people get sick they don't also end up homeless
  • Create stricter rules for landlords about both prices (pegged to fair market rates chosen by a third party) and the services they're required to provide. Make the punishment for repeatedly violating these rules ridiculously harsh.
  • End capitalism
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Jakelshark t1_j6y6fun wrote

The rent v mortgage thing is understandable in that the bank is going to most likely require insurance and taxes to be paid in escrow. So the mortgage might be $1,500, but the bank needs $2,300 monthly or whatever because they don't trust most people to keep up with insurance and taxes on their own. And that's without getting into long term maintenance costs

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Antnee83 t1_j6y7hlc wrote

> So the mortgage might be $1,500, but the bank needs $2,300 monthly or whatever because they don't trust most people to keep up with insurance and taxes on their own.

Guys.

Both of these things are part of a mortgage payment in almost all cases. Property taxes are paid on your behalf by the lender, and is included as part of your mortgage payment. You're almost always required to hold homeowners insurance (and not just the minimum policy) while you have a loan.

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Jakelshark t1_j6y8dbl wrote

I know how it works. I have owned multiple houses (not at the same time, so put down your pitchforks)

I'm just trying to draw a distinction between the home loan part (what you get preapproved to spend) and the rest of the fees you're expected to pay monthly. The home loan part is traditionally a fixed payment, whereas the taxes/insurance can vary over time.

My last home was 860/month for the mortgage to pay principle and interest. Over 6 years the taxes/insurance went from about 300 to 400 a month.

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FITM-K t1_j6ya7wg wrote

By mortgage I meant the whole payment to the bank (i.e., including taxes and insurance). My full monthly payment, taxes and insurance included, is over $1,000 less than my house would cost to rent.

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FightTomorrow t1_j6yi1px wrote

That’s literally what it always means. It’s never “my mortgage is 1500… not including mortgage insurance, property taxes…”. Even Zillow includes it in their estimate.

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damariscove t1_j723kda wrote

I think it would be a lot easier to have a massive sales tax on short term rentals as an alternative to property tax. It accomplishes the same thing while being much more enforceable.

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Squidworth89 t1_j6xytjs wrote

So either raise rent some more or destroy private property in this country… got it.

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FITM-K t1_j6xzk79 wrote

Yup that's exactly what I said, you nailed it.

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Squidworth89 t1_j6y00p8 wrote

And return to irresponsible home loans… like we haven’t learned from that last time… mortgage is one cost to homeownership.

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FITM-K t1_j6y21cb wrote

Yeah that's a great point, because when you're renting there are definitely no other costs associated with that.

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Squidworth89 t1_j6y31mv wrote

You got $5k-$8k sitting around for a boiler? $20k for a roof? Banks want to know the property will continue to be kept valuable till they get all their money back.

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FITM-K t1_j6y6zel wrote

>You got $5k-$8k sitting around for a boiler? $20k for a roof?

Not sure why you're asking me, but yes, I have enough money in the bank to pay for both of those things out of pocket. I'm not a renter though.

> Banks want to know the property will continue to be kept valuable till they get all their money back.

Reasonable, but (1) that is why they require home insurance and, (2) that doesn't make it reasonable to tell someone they "can't afford" a mortgage payment that's significantly lower than the rent they're already paying.

Yes, home maintenance costs money, but someone who's paying $2,500 for rent can save quite a bit of money every month if their mortgage is going to be $1,500. And while those big expenses you're talking about do happen, they're rare, and generally foreseeable. You don't just suddenly need a new roof, if the house is going to need a new roof, generally everybody is aware of that going into the purchase.

And if a surprise expense does pop up that the homeowner can't cover, there are options including home equity loan, HELOC, potentially the home insurance, etc.

And honestly, owning a home is a big part of the reason why I do have money in the bank to cover those kinds of expenses. If I had to try to rent an equivalent place, or even a smaller one, I'd be saving a lot less each month.

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Squidworth89 t1_j6y9szs wrote

Mortgage lenders look for 35ish% debt to income. Some will go up to 45%. Even 50% sometimes.

The first one is very reasonable. The second two imo are borderline irresponsible.

Their rent payment doesn’t matter for getting a mortgage.

If they can’t get a mortgage; it’s either their income isn’t high enough to keep housing to an acceptable percentage or they have other debt issues.

That system isn’t the problem. That’s all very fair. Remember; just because they’re paying rent doesn’t really mean they can afford that rent. A lot of people are paying more rent than they should.

Which leads to the biggest issue being zoning and a lack of units leading to higher prices which have nothing to do with mortgages and is something they have a say in through voting.

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thornify t1_j6ykfxl wrote

A big part of the reason banks are more conservative than landlords is because it takes about two months to evict a tenant, and about 18 months to foreclose on a borrower.

Landlords and lenders are not weighing the same risk, at all.

So it's not entirely fair to suggest that banks are saying renters "can't" afford a mortgage payment lower than their rent payment. It's more like, "as a lender, I am not willing to bet 18 months worth of payments, plus all the costs and hassle of a foreclosure, that you will be able to make this payment."

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Antnee83 t1_j6y5va8 wrote

Yeah, if only there was some way to... "insure" the home against such large damages, so that you didn't have to pay a huge lump sum out of pocket.

And they could even require that you hold that insurance on the home while the loan is still active!

Man if only.

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Jakelshark t1_j6y7a5d wrote

Insurance doesn't pay for maintenance on stuff like a new roof or boiler. That's normal wear and tear that you're expected to pay for as the home owner.

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Antnee83 t1_j6y7vbl wrote

I mean, that's a fair point, but as an owner of an old fixerupper money pit myself, I can confidently say that those expenses pale in comparison to paying rent.

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mymaineaccount46 t1_j6yqq9q wrote

A roof pales next to rent? What the hell does your rent look like?

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Antnee83 t1_j6yrv3v wrote

Lets walk through this slowly.

Rent is more expensive than a mortgage for a comparable amount of living space. By a lot.

So If I'm renting, I'm wasting a shitload of money, that I'd otherwise be saving if I paid a mortgage instead.

With me?

So if I need to do repairs or maintenance, I have the money because my monthly expenses are lower.

No one is getting a mortgage and getting blasted with having to put a new roof on all of a sudden due to wear and tear. Anything else is covered by your homeowners insurance, which you have to have as long as you're paying the house off.

This really isn't all that hard. Mortgage = cheaper = save money = have money.

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mymaineaccount46 t1_j6yukqw wrote

I think you'd be surprised. In my first house I had a furnace go very quickly after buying and my next home I had both washer and dryer go, as well as need to do roof maintenance. None of which made any sense to claim on home owners insurance and therefore came out of pocket.

Maintenance and surprise issues that insurance doesn't cover is not uncommon. If you don't have money to keep up with it and are depending on your insurance you're going to be in for a very bad time.

I spent thousands beyond my mortgage just keeping up and handling house issues at the last place I owned

Edit: forgot to add I had inspections on these places too. Shit just happens.

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polypolypolygon t1_j6zx7b8 wrote

A roof typically lasts 20-30 years. Let's say 20. I just had mine replaced for 10k, but let's say you have a massive roof and it's 20k. That's $80 a month over 20 years, which is less than the rent increases most people see year to year.

Also when I replace my roof, it adds to the value of my house. When my landlord increases my rent to cover the new roof, it adds to the value of their house.

You're paying maintenance costs on the property either way, you just pay it through rent, building equity for the landlord. Oh yeah, and the roof repair on a rental is tax deductible for a landlord.

So sure, you do need some extra cash on hand for surprises, but it's leaps and bounds better than renting in the long run financially.

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mymaineaccount46 t1_j71u0il wrote

Your comparing 80 a month over 20 years to a huge out of pocket expense. It doesn't matter if over 20 years the roof is cheaper if you can't afford it now.

Which is my point. A new roof is not cheaper than your current rent cost.

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Squidworth89 t1_j6y80zv wrote

Those aren’t damages. That’s wear and tear. Insurance doesn’t cover that.

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