The 2-year-old post Izzy responded to was about the independence of the Federal Reserve. Izzy's post was not relevant to that.
Essential Economics for Politicians
- Thread starter Bruddah IZ
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The 2-year-old post Izzy responded to was about the independence of the Federal Reserve. Izzy's post was not relevant to that.
Bruddah IZ
DA
You know better than that. You posted the personal networth worksheet to show that a home is an asset.
Bruddah IZ
DA
Wrong. You responded to the post about what an asset is.
You see, Husker , you don't understand things on a deeper level the way Iz does.
You know how the Mueller investigation is about HRC? He can explain.
Also, when a bank wants to loan you money and you show them your real estate (that you don't rent out) and your artwork and your automobiles, they don't count those as "assets" because they don't earn money. Right, Iz?
Bruddah IZ
DA
Right. That’s “collateral” for the loan.
Are you saying something isn't an asset unless it is bringing in profit on an ongoing basis?
Your answer to the above question was yes. So you don't call "collateral for a loan"
an "asset?" Once again, your knowledge runs so deep about everything. I am amazed!
Bruddah IZ
DA
Do you know what a balance sheet is?
Bruddah IZ
DA
Now you know the difference between an asset and collateral for a loan. I hope.
You poor thing. You speak about economics here, while not knowing that your home (if you own it), which does not "bring in profit on an ongoing basis," is an asset. Did you also know that a house you may own is not only an "asset," (a simple fact which you seem not to understand), but is also an "asset" that can be used as collateral for a loan?
Pop quiz: can you name a type of collateral which is not an asset?
This soon to be schooled "Legend of a Troll " doesn't know
his " Asset " from a Three dollar hat...
Bruddah IZ
DA
Yes. If you own a home outright and it does not cash flow. It is not an asset. You continue to pay insurance, property tax, mello roos/HOA fees (if applicable), electricity, water/sewage, maintenance, etc. which makes your home a liability because money comes out of your pocket to maintain ownership and longevity of your home. Of course you can use your home as collateral for a loan (i.e. home equity LOC) but when you do so you add to the aforementioned expenses that come out of your pocket, a liability, as opposed to going in to your pocket which makes it an asset. Now since you're so sure that homes are an asset I will say that they are most definitely an asset for your bank if you still owe them money. Therefore, the house that you live in cannot be an asset for both you and the bank unless your house is also being rented out to room mates that pay all or some of the aforementioned expenses.
Bruddah IZ
DA
I had hoped.
OK, I will go slow here. The value of your house as an asset, whether you owe money on it or not, is the equity value less the costs (e.g. mortgage, maintenance, etc.)...although most wouldn't consider costs such as electricity and water, etc., to reduce the asset value.
The fact that you have expenses to maintain the asset may reduce the asset's value, but does not make it a "liability," it remains an "asset."
So let's say you bought a house for $1m and, due to CA real estate being what it is, it is now worth $3m on the market.
Let's say you have a loan of $800K on the house. The bank has an "asset" which is a secured loan of $800K against the collateral which is now worth $3m. But you, the "owner" of the house, has an asset worth $2.2m, i.e. the $3m value less the $800K you owe on it. Only you can sell the house, not the bank (unless the bank forecloses on you).
So contrary to what you say above, the house you live in is definitely an asset to you and the loan on it is an asset to the bank.
This is the MOST BASIC stuff about economics and budgets and value...indicating perfectly what I have been saying about you and economics...you know absolutely nothing.
You deemed your puny brain as a tangible asset that could be used as collateral....
Upon further examination your puny brain appears to be over encumbered with
useless information that is not " Intellectual Property " but just regurgitated
information derived from worthless bodies that spew nonsense like this thing
called Alexandria Ocasio-Cortez ....
You'll need a couple of cosigners with Tangible Intellectual assets for this Dept
to proceed with the process you so desire....
Meanwhile I suggest you make a list of your " Hard " assets that can be pledged
as collateral and held in a secure location deemed safe by both parties....
Although you will assume any and all losses occurring from the theft of YOUR
" Hard " assets ....You can purchase an insurance policy to cover the " Hard "
assets for a nominal fee from our associated Insurance Dept...
Pop Quiz: A chicken's got a brain " This " big yet it knows when to come in
out of the rain....are you a Turkey or a Chicken ?
I think you're a...........
Bruddah IZ
DA
The equity value of your house does not put money in your pocket until you sell it and therefore equity value is not an asset. Borrowing against your homes equity does not change that fact. It only increases the assets of your lender. The fact that you have expenses to maintain the banks assets as a condition of their $800k loan to you are contractual (PMI, taxes, HOA/mello roos) and increases your liability for the benefit of the banks asset, your home. Yes it does remain an asset, but at this point notice the direction in which the money flows for 30 years. It's not toward you and you are okay with it because you want to build equity. But I know how tempting it is to think that you own that equity. You don't. You have access to it at a cost.
So contrary to what you say above, the house you live in is definitely a liability to you and the loan is an asset to the bank when you consider who pays the bank.
In your example you have a loan of $800k. What was the purchase price?
Bruddah IZ
DA
I always run in to these convoluted explanations when people forget which way the money flows monthly.