3 ms·

That still leaves an enormous quantity of people who don't have 100k just laying around, and are not reliable enough to be loaned the sum.

notch656a 5y ago
Someone who can't be trusted with 100k shouldn't be entrusted to inhabit a house worth 700k. One careless action can easily cause 100k worth of damage to a house. It's probably easier to keep 100k safe than it is to keep at least 600k of value of a 700k house safe.
- thegrimmest 5y ago
  Ehm, I'm not sure how that makes any sense at all. Someone who can't be trusted to repay 100k can certainly be trusted to inhabit a (insured) house worth 700k without setting it on fire. Landlords do exactly this all the time. Also, it's not about keeping the money safe, but about generating a return.
  - notch656a 5y ago
    Well if we're talking about loaning 100k for the house, you can always execute your lien holder privileges to take back the house if they don't pay. Mortgage insurance providers a like service to the mortgage provider to minimize losses. I'd much rather be in position backing mortgage on 100k house, backed by mortgage insurance, than risking someone I don't trust with that same 100k having full custody of my house worth 700k.
    - JumpCrisscross 5y ago
      > Mortgage insurance providers a like service to the mortgage provider to minimize losses If real estate becomes a non-cash producing “asset,” mortgage insurance would become far pricier.
      - notch656a 5y ago
        While we're playing the what if game, if any and every untrustworthy character were given custody of 700k house, home owner insurance would also become far pricier.
    - thegrimmest 5y ago
      Your premise still doesn't make any sense. There are far more people who can be trusted not to cause massive property damage to their own homes (which they will then be liable for) than can be trusted to proactively work to repay a mortgage. It's a lot easier not to destroy value than to create it. Mind you, many people do cause significant damage to the spaces they rent. This being among the most frequent complaints by landlords.
      - notch656a 5y ago
        You have to _proactively_ work to pay rent. Someone financially struggling does not have an easier time paying rent on a 700k home than mortgage on a 100k home, that doesn't even make sense to make an argument on the proactive payment difference. Merely not paying rent is a damage to a landlord who still has to maintain a property that the unpaying renter enjoys, so we can't argue that merely not damaging the home avoids damaging the landlord. At equal level of negligence risk (which for most people, yes, is quite low), the monetary expected loss through negligence or crime on 700k home should be greater than that on 100k home, all else equal (same person, location, etc). And all of this fails to account for the greater personal incentive one has to pay for their own house and take care of their own house than for someone else's they're just renting.
        thegrimmest 5y ago
        Just because the tenant doesn't pay rent, it doesn't meant he landlord doesn't have to pay his mortgage. Mortgages aren't given to people who don't have the capital reserves to withstand loss of rental income. The main differentiating factor between a landlord and a tenant is risk of default. If you are appraised to have a risk low enough for a bank to tolerate, you get a mortgage. If not, you don't. What's wrong with this process? If you don't pay rent you are (supposed to be) evicted in short order and replaced with someone who does pay rent, specifically to avoid damaging the landlord as you describe. > the monetary expected loss through negligence or crime on 700k home should be greater than that on 100k home But that's not what we're talking about. The risk of significant damage through negligence by a tenant on a 700k home is much lower than the risk that same tenant would default on a 100k mortgage. That's the whole point.
- rhacker 5y ago
  I don't know where these numbers came from. There is NO 700k house in my imaginary scenario. In fact the entire cost to BUILD this house is 100k, so the only way for damage to reach 100k would be for the house to literally burn down - which is covered by insurance. The most you would expect "junking up" a house that costs 100k would probably be about 10 - 20k of damage - depending on the finishes. This whole thread spawned from this comment makes no sense. And again, since this world has no renting, these people want to TAKE CARE of their house, not ruin it. Even if these people decide to "junk it up" on purpose because they are about to default - again burning causes insurance payout to the bank and other than that it's just up to 20k. The other goal here though is that because it's 100k there's a much higher chance that this person can work a normal / non coding job and make ends meet and live in this 100k house just fine with little chance of defaulting.

notch656a 5y ago

Someone who can't be trusted with 100k shouldn't be entrusted to inhabit a house worth 700k. One careless action can easily cause 100k worth of damage to a house. It's probably easier to keep 100k safe than it is to keep at least 600k of value of a 700k house safe.

thegrimmest 5y ago
Ehm, I'm not sure how that makes any sense at all. Someone who can't be trusted to repay 100k can certainly be trusted to inhabit a (insured) house worth 700k without setting it on fire. Landlords do exactly this all the time. Also, it's not about keeping the money safe, but about generating a return.
- notch656a 5y ago
  Well if we're talking about loaning 100k for the house, you can always execute your lien holder privileges to take back the house if they don't pay. Mortgage insurance providers a like service to the mortgage provider to minimize losses. I'd much rather be in position backing mortgage on 100k house, backed by mortgage insurance, than risking someone I don't trust with that same 100k having full custody of my house worth 700k.
  - JumpCrisscross 5y ago
    > Mortgage insurance providers a like service to the mortgage provider to minimize losses If real estate becomes a non-cash producing “asset,” mortgage insurance would become far pricier.
    - notch656a 5y ago
      While we're playing the what if game, if any and every untrustworthy character were given custody of 700k house, home owner insurance would also become far pricier.
  - thegrimmest 5y ago
    Your premise still doesn't make any sense. There are far more people who can be trusted not to cause massive property damage to their own homes (which they will then be liable for) than can be trusted to proactively work to repay a mortgage. It's a lot easier not to destroy value than to create it. Mind you, many people do cause significant damage to the spaces they rent. This being among the most frequent complaints by landlords.
    - notch656a 5y ago
      You have to _proactively_ work to pay rent. Someone financially struggling does not have an easier time paying rent on a 700k home than mortgage on a 100k home, that doesn't even make sense to make an argument on the proactive payment difference. Merely not paying rent is a damage to a landlord who still has to maintain a property that the unpaying renter enjoys, so we can't argue that merely not damaging the home avoids damaging the landlord. At equal level of negligence risk (which for most people, yes, is quite low), the monetary expected loss through negligence or crime on 700k home should be greater than that on 100k home, all else equal (same person, location, etc). And all of this fails to account for the greater personal incentive one has to pay for their own house and take care of their own house than for someone else's they're just renting.
      - thegrimmest 5y ago
        Just because the tenant doesn't pay rent, it doesn't meant he landlord doesn't have to pay his mortgage. Mortgages aren't given to people who don't have the capital reserves to withstand loss of rental income. The main differentiating factor between a landlord and a tenant is risk of default. If you are appraised to have a risk low enough for a bank to tolerate, you get a mortgage. If not, you don't. What's wrong with this process? If you don't pay rent you are (supposed to be) evicted in short order and replaced with someone who does pay rent, specifically to avoid damaging the landlord as you describe. > the monetary expected loss through negligence or crime on 700k home should be greater than that on 100k home But that's not what we're talking about. The risk of significant damage through negligence by a tenant on a 700k home is much lower than the risk that same tenant would default on a 100k mortgage. That's the whole point.
rhacker 5y ago
I don't know where these numbers came from. There is NO 700k house in my imaginary scenario. In fact the entire cost to BUILD this house is 100k, so the only way for damage to reach 100k would be for the house to literally burn down - which is covered by insurance. The most you would expect "junking up" a house that costs 100k would probably be about 10 - 20k of damage - depending on the finishes. This whole thread spawned from this comment makes no sense. And again, since this world has no renting, these people want to TAKE CARE of their house, not ruin it. Even if these people decide to "junk it up" on purpose because they are about to default - again burning causes insurance payout to the bank and other than that it's just up to 20k. The other goal here though is that because it's 100k there's a much higher chance that this person can work a normal / non coding job and make ends meet and live in this 100k house just fine with little chance of defaulting.