this post was submitted on 19 Oct 2023
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Because they take on the risk of what happens if you don't pay it or default. They have to pay out a massive amount of money that they could have used for other investments, instead you become the investment and they just hope you'll pay off, literally.
You don't have to have the bank front you a loan though, you could just save up for 30 years and pay it all off with cash, but given the way housing prices are increasing, that seems to be a terrible plan. By the time you've saved up $150k for that $300k home, that home will likely be worth $450k lol. It's better to get in early, lock in a rate (and refinance later), and start to pay off your mortgage now.