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Borrowing money against their stuff to get more stuff to borrow money... (thelemmy.club)
submitted 7 months ago by to c/aboringdystopia@lemmy.world
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[–] -1 points 7 months ago (2 children)

No. They keep having to move away from their homes and get new loans at higher rates.

They've never been able to pay off a home because they keep having to do new mortgages.

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  • [–] 6 points 7 months ago (1 child)

    Your parents just suck at personal finance. They used their home as a piggy bank and raided the equity every time they moved. Either that or they kept buying more expensive properties.

    I'm sorry, but your story is just not credible. If they owned a house in the city, and then the value soared, they should have been able to take their windfall, move out to the country, and buy a cheap property in cash. The only way this isn't true is if they either did a lot of cash-out refinancing, or if when they moved to the countryside, they bought a much larger property.

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  • [–] 1 point 7 months ago* (last edited 7 months ago)

    You're supposed to use equity towards a new home when interest rates are higher than retirement returns.

    The property was cheap (about an acre for 40,000), but then they had to put a house on it. They were living in an RV that came with the property due a few months while the house was being built.

    Covid hit in the lag between when their old house sold and the new one was ordered, so the cost of building the new house was double what was expected, so instead of buying cash their remaining equity was wiped out and they ended up with a loan. But it was still cheaper than their old house because of taxes.

    But after the new, smaller house was finished, a neighboring property was also bought and a multi-million dollar mansion was placed on it. And then another.

    And then the county and school district raised the tax rate for everyone while also quintupling the assessed value of the land. There's a circuit breaker law, so it can only go up 10% a year, but even that's unsustainable for people on a fixed income.

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