Essential Economics for Politicians

Bruddah IZ said:
Just wanted to make sure you were clear on the direction of cash flows, from your account to the bank. My beliefs have nothing to do with what an asset is. If you're a borrower that's just the way it is. You pay the lender for the use of money. BTW, you never stated what the purchase price and interest rate was in your example. I wonder why?
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Sure i did. Go back and re-read it.

Hey, did you know this? The bank's "asset value" of its loan is the loan amount plus the interest rate. The bank does not participate in any increase in asset value of the house. So if the house triples in value over thirty years (i.e. about average in So Cal, although mine is about 4x in 20 years), the borrower gets all that increased value and the bank gets none of it! I can sell a house for $3m that I only put $200,000 down on, plus my mortgage payments. The bank only gets back its $800,000 loan, plus the interest payments it previously received! So who has the more valuable asset over 30 years? Do you even understand the question? LOL.
 
Bruddah IZ said:
Very few people understand finance and economics. That's why you speak of them as if they are the same thing. We'll get you there. In your example of the home sale, what did you do with the profits?
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I think I might start charging you for these lessons. My profits were capital gains, so i paid some taxes on them and put the rest in stocks and/or bonds and/or more real estate.
 
messy said:
Sure i did. Go back and re-read it.

Hey, did you know this? The bank's "asset value" of its loan is the loan amount plus the interest rate. The bank does not participate in any increase in asset value of the house. So if the house triples in value over thirty years (i.e. about average in So Cal, although mine is about 4x in 20 years), the borrower gets all that increased value and the bank gets none of it! I can sell a house for $3m that I only put $200,000 down on, plus my mortgage payments. The bank only gets back its $800,000 loan, plus the interest payments it previously received! So who has the more valuable asset over 30 years? Do you even understand the question? LOL.
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I do. Do you know what an ammortization schedule is?
 
messy said:
I think I might start charging you for these lessons. My profits were capital gains, so i paid some taxes on them and put the rest in stocks and/or bonds and/or more real estate.
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..or more real estate? Rental property or primary residence. Okay capital gains. Why didn't you reinvest your capital gains in to more real estate given the current market volatility?
 
messy said:
Hey, did you know this? The bank's "asset value" of its loan is the loan amount plus the interest rate. The bank does not participate in any increase in asset value of the house.
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And the bank prefers it that way. You insure the loan for them through PMI or a 20% down payment. You insure the home, you pay the property taxes, and maintain the home. All they do is come up with the cash.
 
Bruddah IZ said:
And the bank prefers it that way. You insure the loan for them through PMI or a 20% down payment. You insure the home, you pay the property taxes, and maintain the home. All they do is come up with the cash.
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Whatever works for you. A bank pays 80% and I pay 20% of an "asset" (do you yet know that it's an asset? or is it still not an "asset" in your book?) and I get 100% of the increase in value and they get 0% of the increase in value. Must be ok for the bank, or they wouldn't do it. Much better for me. So if you look at the mortgage I have paid on my house, plus the rental value I save for living in it, over the past 20 years, if I sold it tomorrow my deal is soooo much better than the bank's deal it's not even funny. All your conclusions are wrong. How is such a thing possible? You must keep your money under a mattress.
 
messy said:
Whatever works for you. A bank pays 80% and I pay 20% of an "asset" (do you yet know that it's an asset? or is it still not an "asset" in your book?) and I get 100% of the increase in value and they get 0% of the increase in value.
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No you don't. Your agent won't let you.
 
messy said:
Must be ok for the bank, or they wouldn't do it. Much better for me. So if you look at the mortgage I have paid on my house, plus the rental value I save for living in it, over the past 20 years, if I sold it tomorrow my deal is soooo much better than the bank's deal it's not even funny.
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Not gonna happen without an interest rate and purchase price to start with.
 
Bruddah IZ said:
No you don't. Your agent won't let you.
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I think what may cause you to be so wrong all the time is you don't keep it simple. If you did, you would reach different conclusions.
As far as paying taxes to the government and fees to banks and real estate agents and all that, don't worry about it so much. You'll make more money that way; I promise.
 
messy said:
I think what may cause you to be so wrong all the time is you don't keep it simple. If you did, you would reach different conclusions.
As far as paying taxes to the government and fees to banks and real estate agents and all that, don't worry about it so much. You'll make more money that way; I promise.
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messy said:
I think what may cause you to be so wrong all the time is you don't keep it simple. If you did, you would reach different conclusions.
As far as paying taxes to the government and fees to banks and real estate agents and all that, don't worry about it so much. You'll make more money that way; I promise.
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Not without a purchase price and interest rate.
 
messy said:
Sure i did. Go back and re-read it.

Hey, did you know this? The bank's "asset value" of its loan is the loan amount plus the interest rate. The bank does not participate in any increase in asset value of the house. So if the house triples in value over thirty years (i.e. about average in So Cal, although mine is about 4x in 20 years), the borrower gets all that increased value and the bank gets none of it! I can sell a house for $3m that I only put $200,000 down on, plus my mortgage payments. The bank only gets back its $800,000 loan, plus the interest payments it previously received! So who has the more valuable asset over 30 years? Do you even understand the question? LOL.
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Not only that - if the bank forecloses on the asset house for any reason and then sells it off at auction, any money gained from the auction beyond the balance on the loan (plus the inevitable list of fees and expenses) goes to the borrower, not the bank.
 
espola said:
Not only that - if the bank forecloses on the asset house for any reason and then sells it off at auction, any money gained from the auction beyond the balance on the loan (plus the inevitable list of fees and expenses) goes to the borrower, not the bank.
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You mean if you buy a house that you can’t afford? And you can’t even sell it when you get in trouble because you’re under water on it? After reading your posts, i can understand you being concerned about that. You don’t have a clue. You’d better not buy one, pal.
 
messy said:
wouldn't matter. you've made clear you couldn't afford it. don't trouble yourself with the analyses. go back to your JK Galbraith YouTube videos.
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No trouble at all. It's hardly an analysis. Especially if we have a purchase price and interest rate.
 
espola said:
Not only that - if the bank forecloses on the asset house for any reason and then sells it off at auction, any money gained from the auction beyond the balance on the loan (plus the inevitable list of fees and expenses) goes to the borrower, not the bank.
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Clueless.
 
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