Certain industries are just built on scum. Car dealerships are one such industry. They fuck over uneducated people on an hourly basis. I have been shopping for a car for my daughter and when I ask the salesman "how long has it been sitting on your floorplan?" They look at me like "how does he speak the secret language?".
Let me introduce you to any broker in any industry. House, car, boat, insurance... all the same. Merely profiting off a transaction while adding little to no value to people who know what they are doing, and they rip you off if you don't.
My wife and I refi'd almost there years ago to 2.25 rate. I still get mail from the company saying I can refi and take equity out of my house.
Don't even mention that you're paying in cash until you're already in the financing office.
Scum is about to get worse. Smaller banks and credit unions are allowing people to refi from 30 to 40 year mortgages. All the major players have their eyes on this. People will end up trading any form of equity for lower monthly payments so they can buy more house or more toys. 100% of these people will be surprised come house sale time when they see their take of appreciation getting eaten by that fat 40 year mortgage.
Not 100% accurate. Dealerships do make money on the sale most times. Variables go into play like how long it has been eating up their floorplan (this interest they have paid). We started with a 25% margin dealer pricing to MSRP. They don't make a "ton" of money per unit on the sale alone. $40k car they probably paid $30k.
It's financial darwinism. The weak will be carrying those 40-yrs and the strong will be those who grabbed a refi at 2.25%
With life expectancy where it is I think we should consider 50 year govt backed mortgages. It's really the sweet spot in affordability for the youth of today!
The problem will be when those 40 year notes become commonplace in order to get people into houses. When that happens, many people will trade equity for affordability. 70% of all home loans are 30 year, and it is easy to see that people will rationalize getting a 40 "to pay it down later", while others will use it to get more house than they need, or the aforementioned people who need it to get into a house at all. In all of these cases, trading up or down will be off the table because there will be no equity to use to that effect.
Wouldn't even surprise me.
Or people in their 50's and 60's will take out 30 year notes and figure "F them kids and inheriting anything" and go for the lowest payment fully intending the bank to own the house as soon as they die. Accelerating the path to banks owning all housing and "generational wealth" just being some words in a economics history book.
I mean I dunno, I get what you're saying but there's an element in the post 06 market that makes me a bit sympathetic to that play. The best position to have when your house value goes tits up and you'd rather abandon the mortgage is $1. The best position to have to realize return on property value is $1. I realize that's not really true with certain mortgage terms and economic situations like slowly depressing values with skyrocketing interest rates causing the bank to foreclose and your monthly payment to go up anywhere for a shittier property.
