If you owe money on your home, are you really a 'homeowner?'

[ByLoSellHi]

At what point does one 'own' their home?

Is it when they have 20% equity, 50%, 85%?

Or does one really only 'own' one's home when it's completely unencumbered by any mortgage or other such albatross?

This is an important point that merits discussion in an age in which American Politicians, particularly, trumpet the home 'ownership' rates, even when we are in the midst of a fairly serious housing crisis in which many homes have lost relative value, and a fair share of homeowners have negative equity as they owe more on their homes than what the underlying home is worth.

 

[nutmeg]

Or does one really only 'own' one's home when it's completely unencumbered by any mortgage
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Never. You can own your home unencumbered just be sure to pay your property tax or you won't "Own" it for long.

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At what point does one 'own' their home?

Is it when they have 20% equity, 50%, 85%?
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Depends on your personal balance sheet

 

[WaveStrider]

The bank owns it.

It's not an asset, it's a liability (like that Rich Dad, Poor Dad guy says....)

And if it can be foreclosed for lack of payment of taxes, the gov't owns it.

 

[huh]

If you don't really own your home if theres a mortgage on it......then technically do americans really own the US since foreigners own US debt. Isn't it kind of like the government spends and taps their "home equity line" (ie foreign governments) for money.......wonder when we fully tap the equity.

 

[Thermactor]

Quote from WaveStrider:

The bank owns it.

It's not an asset, it's a liability (like that Rich Dad, Poor Dad guy says....)

And if it can be foreclosed for lack of payment of taxes, the gov't owns it.

no, it's property, plant and equipment; the mortgage is a current and long-term liability (put it into the Mortgage Payable T-account)

 

[OldTrader]

Quote from ByLoSellHi:

At what point does one 'own' their home?

Is it when they have 20% equity, 50%, 85%?

Or does one really only 'own' one's home when it's completely unencumbered by any mortgage or other such albatross?

This is an important point that merits discussion in an age in which American Politicians, particularly, trumpet the home 'ownership' rates, even when we are in the midst of a fairly serious housing crisis in which many homes have lost relative value, and a fair share of homeowners have negative equity as they owe more on their homes than what the underlying home is worth.

At what point does one "own" their home? Legally, one owns it the instant the deed is executed and recorded.

The size of the mortgage and/or the amount of equity don't change legal ownership. The way it is referred to legally is that you own the property "subject to the mortgage". You own it, the bank has a lien recorded which secures their interest in the property that enabled you to buy it to begin with.

There are a certain "bundle of rights" that are legally transferred with the property. For instance, you have the "right of possession". No one else may "possess" this property unless they do something legally to permit that. A lender for example may foreclose to change "possession". But he may only foreclose after undertaking a legal procedure set forth in state law.

Another right is the right of "exclusion". Once the deed has been recorded in your name you may decide who may use or enter your property.

The "right of enjoyment", the "right of control", these are all parts of your bundle of rights that you legally obtain when the deed is recorded in your name.

You may bargain away part of your bundle of rights. For instance, you can lease your property to someone else which would give them the right of possession in return for a monthly fee (rent).

Yes, your property is encumbered by a loan perhaps. But that does not give the lender any of the bundle of rights that go with the ownership of the property. Again, the lender may only obtain ownership rights by foreclosing, which is only done if you default on your contract with the lender.

Perhaps you guys have the "rights" of legal ownership confused with the responsibilities of ownership. Some of those responsibilities may include paying your loan, paying taxes. You may also have to mow your lawn to be in compliance with city ordinances. These are all responsibilities, but they don't mean you don't "own" the property.

OldTrader

 

[Hydroblunt]

Quote from OldTrader:

Long post

You're using reaching rationalizations that require several paragraphs.

In USA, you never truly own your property. If you have a mortgage on it, you don't own your property, the bank does. The reality is that the mortgage can get sold and called on. Chances are, you won't have the full balance ready. This has been done a lot in the past, it's a cruel but very effective tactic. One may argue that there are provisions in mortgage agreements preventing this, but upon transfer of mortgage, they become void (not in all cases).

At the end of the day, several government groups can come in and just take your property. FEMA, Port Authority, IRS, EPA and various uses of eminent domain & condemning the property . You won't even be allowed to finish a sentence before they kick you out. And no, they don't actually have to have a valid reason, IRS certainly does not need one.

As for being able to rent out the property you supposedly own and other ownership perks you mention, renters have the same rights with a lot less risk.

 

[OldTrader]

Quote from Hydroblunt:

You're using reaching rationalizations that require several paragraphs.

In USA, you never truly own your property. If you have a mortgage on it, you don't own your property, the bank does. The reality is that the mortgage can get sold and called on. Chances are, you won't have the full balance ready. This has been done a lot in the past, it's a cruel but very effective tactic. One may argue that there are provisions in mortgage agreements preventing this, but upon transfer of mortgage, they become void (not in all cases).

Nope. You're completely wrong. Residential mortgages cannot be called because they are sold. And no, it has never been done. The only reason a residential mortgage can be called is if the borrower defaults on the note. You can do that by not paying the monthly payment. There are other ways you can default of course, but this is by far the most common.

Further, transferring a mortgage does not make any of the clauses in the mortgage "void". Geezuz, where do you get this stuff? Complete nonsense.

At the end of the day, several government groups can come in and just take your property. FEMA, Port Authority, IRS, EPA and various uses of eminent domain & condemning the property . You won't even be allowed to finish a sentence before they kick you out. And no, they don't actually have to have a valid reason, IRS certainly does not need one.

In general, no, this is not true either. This is part of what the "responsibilities" of ownership entail. For instance, you have to pay your income taxes. If you don't, and the IRS obtains a lien against you, it attaches to the property. However, it's rare that the IRS will actually seize the property. Typically the lien sits there and encumbers the property.

EPA, yeah, you can't violate certain federal and/or local ordinances concerning the environment. Hello? This is part of being responsible. Do you claim you have no freedom if you are required to pay attention to traffic signals?

In recent years it is true there have been some real travestys regarding eminent domain. This affects very few however. I don't make light of it, I just am not willing to say you don't own property because their have been some ridiculous eminent domain cases. That said, even here, there is a legal process that must be undertaken, not all successful. And the owner must be fairly compensated for his property.

As for being able to rent out the property you supposedly own and other ownership perks you mention, renters have the same rights with a lot less risk.

No renters don't have the same rights. Renters have a temporary right defined by a lease, which may be terminated as specified in the lease. The lease will also define how the renter may use the property. And the renter only has the right of possession and enjoyment. Not even close to ownership.

OldTrader

 

[flyingiguana]

it is a leveraged asset that you own...

if you have control over something, you own it...

 

[Mercor]

The banks borrow money to lend for that home.
So one could say we all own that house.