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PaperclipPerfector  1yr ago (text post)   3931 thread views

Small-Scale Question Sunday for November 12, 2023

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You seem to be implying that back in the day people paid off their mortgages before the thirty year term was up. Is this actually true? If not, then holding the term constant, yeah I'd prefer the lower payments, thanks.

According to American Nightmare (Randal O'Toole): Six-year house loans (with down payment of 0.5 percent, no fixed payment schedule, and the possibility of refinancing at the end of the term) were popularized around year 1889, and 12-year mortgages from building-and-loan associations (with down payment of 25 percent) also were popular. Sears's famous mail-order house kits could be obtained with 15-year mortgages (with down payment of 25 percent) around 1911 (zero down payment from 1917 to 1921). Longer-term mortgages weren't mainstream until 1948, when the federal government authorized the Federal Housing Administration (created in 1934) to offer 30-year mortgages (with down payment of 5 percent, or zero for veterans).

In The Jungle, Jurgis' mortgage was 20% down ($300) and $12 a month for eight years and four months (plus interest at 7% per year which the agent never told them about).

To put it another way - 30 year mortgages have been mainstream longer than six year mortgages were. unless fuckduck thinks that price/income ratios are going down to 19th century levels, the 30 year mortgage is here to stay and yeah the monthly payment is the important question.

It won’t stay, the trend is constantly increasing mortgage duration. People are already counting on parental help to get a 30y these days, so it will go to 60, two generations. It won’t stop until every purchase becomes an infinite payday loan. You’ll own nothing, and be happy.

Maybe we can’t get the price/income ratios down to the 19th century, but we can stop them from going up even further by lying less to the financially incontinent, by calling their cheap debt rent.

30 year mortgages have had a remarkably long life and I don't see them going away any time soon.

33% of homeowners have paid off their mortgages. People are not going from mortgage to mortgage perpetually all their lives - this claim has no basis in reality.

Shouldn't the Rule Against Perpetuities bar infinite mortgages?

The Statutory Rule Against Perpetuities prescribes a maximum term of 90 years. That isn't infinity, but it still is a pretty long time.

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