Liquid Reigns
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- Feb 7, 2016
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- #41
Which doesn't conflict with anything I stated nor does it claim/back-up anything Humorme stated. SHRUGThe bank doesn't make anything on your house at either value, it is nothing more than a ledger item and has no bearing on handing out loans.I buy a $300,000 home with $60,000 down.
The bank lends me $240,000.
The value of my home increases to $400,000.
My loan is still $240,000.
Teach me your banking wisdom by explaining how the bank can suddenly lend more money.
Here is your lesson:
Using your example, if I bought that house for $300,000 and put $60,000 down, I owe the bank $240,000.
So, I hire the good old USDA approved, licensed, background checked, insured, bonded, Americans and invest another $20,000 in this home. It's value rises from $300,000 to $340,000. So, when the home is flipped, it is worth more money and the bank loans out more since they are now holding more in assets.
I can take that same $20,000 and hire a cheaper crew, and the value of the home rises to $360,000 and I get more things done in the remodel job. I flip that home and that's another $20,000 the bank gets to loan out over the first crew's bid.
So, I have a house worth more money - more dollars in my pocket. The bank gets more money - more they can charge in interest. Now, here is what is wrong with your argument:
Your USDA approved, licensed, background checked, insured, bonded guy charges more and when he's paid, he is still paying his laborers the same as the guy who charged me less. Then the American contractor goes out and spends that profit he made on shit made in China, Japan, Korea, etc. There is no advantage for me or the bank to pay more for a remodel job given those parameters.
The best solution is for people to realize that an American contractor is not worth the wages you'd pay to a surgeon. If your surgeon screws up, it's your life. If the cheaper re modeler screws up, you sue in civil court and get the job finished or your money back. But, in no event does it make sense to cut a cheaper competitor out of the equation over human registration papers issued by a corrupt government.
Now, if the American contractor offers competitive bids, only spends his money with American companies selling made in America goods and pays his employees a realistic wage, I gladly and deliberately support him.
So, when the home is flipped, it is worth more money and the bank loans out more since they are now holding more in assets.
I still own the home.
The bank can't lend more.
Thanks. LOL!
If all I have is a $340,000 house that is all it is going to sell for... tops. a $360,000 will sell for more and the bank will make more when the house is flipped.
Not so.
Read this very carefully
Behind The Scenes Of Your Mortgage
A Beginner's Guide to Hedging