Is it sin to take out a house loan?

[Matthew1344]

Proverbs 22:7 is a commonly used verse on the talk radio show "moneywise" with Howard Dayton. He uses it almost every week when giving financial advise to callers.

This got me thinking about the future. I was planning on saving up 20 percent down payment for a house an then taking out a loan for the rest and do 15 year payment so interest would be even lower on the loan I would take out.

But is this verse outlawing me from taking out a loan?

 

[KMK]

No.

Exo 22:25 If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.

Deut 15:8 But thou shalt open thine hand wide unto him, and shalt surely lend him sufficient for his need, in that which he wanteth.

Deut 24:10 When thou dost lend thy brother any thing, thou shalt not go into his house to fetch his pledge.

These verses show that lending/borrowing is not, in and of itself, sinful. However, there is a right way and a wrong way to do so.


In my experience there is very little practical difference between renting a house and mortgaging a house. Either way, you are living in a house that belongs to someone else. Either way, you are in some sense indebted to someone.

 

[Contra_Mundum]

Matt,
Probably the first thing to note about this text is that it is in the indicative mood, not the imperative. It is describing something, not commanding.

Whether it is wise or not to ever be in a debtor's position is something that cannot be derived from this text alone. It is probably unwise under many circumstances that people nevertheless take on a loan. But, there are degrees of indebtedness. Not every loan is in the same danger of default; and lenders to homeowners tend to make a ton of money over the life of the loan, about 3X on a 30yr at 5%. So, in a way when a loan is "good," everybody wins.

There are also rules and regulations in this country that govern both the lender, as well as the one who takes the loan out. Our society has also created rules of bankruptcy, when in many cases at least some loss is assigned to the lender if the loan-recipient is unable to fulfill his obligation. Limits are thus imposed on the rights of lenders to recoup the assets of the bankrupt.

There's also a corollary to Solomon's adage: If the lender is unbalanced, it's possible for him to become a "slave" to the debtor. If I owe someone 10X my annual salary, I'm probably his "slave," working more for him than for me trying to pay it back. If someone was dumb enough to loan me 100X my annual income and my account represents too great a proportion of the lender's asset class, he's praying I don't die before I pay back the half of it. That's simplistic, but it serves to demonstrate the complexity of this one aspect of human relations.

In most cases, you want to apply a fair sized down payment, because it is the thrifty move. It will save most people money in the long term.

Saving enough money to buy a house outright is not always possible, especially if rent is demanded in the meantime. The idea behind the loan is to make that same pile of money work harder. It doesn't simply allow you to live under a roof for a while; but it puts a portion toward owning the roof outright. 30yr loans were developed to allow more ordinary people to become home and land owners; allowing them to cover an amount about the same as a rental payment, and by diligence and productive labor within a lifetime to become a recognized stakeholder in society.

Bottom line: Prv.22:7 isn't a law. More than that, we aren't under the OT either; and while unwise taking of certain loans could be a violation of the 6th commandment (since it could endanger your family), Christians are not prohibited from all risk-taking. Risk implies consent to accepting the penalty for failure. We are best off refusing the "worst" sorts of deals, and trusting God for his help, since we don't want to actually become slaves of anyone but him.

Hope this is helpful.

 

[Nebrexan]

The Reformation Study Bible's comment on this verse is, "A simple observation of present reality: in this world, wealth is power."

 

[ooguyx]

Even the Moneywise guys aren't saying that it's sinful to get a home mortgage. In my estimation they have a far more biblically well rounded view on debt than Dave Ramsey.

 

[Bill The Baptist]

Even the Moneywise guys aren't saying that it's sinful to get a home mortgage. In my estimation they have a far more biblically well rounded view on debt than Dave Ramsey.

Debt is something that must be used wisely and sparingly, but that does not mean that it can never be used. Dave Ramsey's method of buying everything with cash is simply unrealistic for those who do not make millions of dollars a year.

 

[whirlingmerc]

Even the rich borrow. But don't go underwater in debt as a way of living

Proverbs 22:7 7 The rich rules over the poor, and the borrower is the slave of the lender. ESV

That's a descriptive generality. It's proverbial wisdom If one lets credit card debt, student loans, home loans go out of control they do become slaves
One can wisely manage debt and savings, you get tax breaks, you get an investment. You get the benefits of a home. Don't make risky choices Don't get involved in usurious interest.

( but one might go heavily into debt to go to med school or law school and it's not necessarily irresponsible since you weigh risks and rewards
Credit card debt is enormously expensive and most people should be very careful about that. Same with buying a house much bigger than you need )

 

[Matthew1344]

Thanks brothers!

 

[Edward]

but one might go heavily into debt to go to med school or law school and it's not necessarily irresponsible

I'd disagree as to law school. And since the economics of medicine is in flux, that certainly has a risk these days. Some engineering programs might be worth some debt.

As for house loans - it's been a while. I think the rule of thumb is at least 20% down, house payments (principal, interest, taxes and insurance) no more than 25% of gross income; total debt service no more than one third of gross. It's in both the Realtors and the bankers interests to put you into more house than you can comfortably afford. So watch the ratios.

 

[Pilgrim]

Even the Moneywise guys aren't saying that it's sinful to get a home mortgage. In my estimation they have a far more biblically well rounded view on debt than Dave Ramsey.

Debt is something that must be used wisely and sparingly, but that does not mean that it can never be used. Dave Ramsey's method of buying everything with cash is simply unrealistic for those who do not make millions of dollars a year.

I'm not a big Ramsey fan either. But even he makes an exception for home mortgages, although I think he may recommend a shorter term loan than the customary 30 years.

 

[lynnie]

I think borrowing for a tangible asset that the bank can take back if you don't make payments ( house, car) is acceptable. Your loan is backed. It is more like long term renting but in the end you own something, and in the meantime the bank owns it if you don't pay.

Borrowing for something that can not be repossessed would be sinful. Jewelry, vacations, furniture. Although I can only grant mercy to folks who get medical care far beyond their means ( I know one who owes a million at least due to leukemia three years ago and crummy insurance).

Tuition debt is standard practice, but risky.

I wish we saw a book of Acts- helping the needy- church today where every kid had tuition paid off and nobody working hard had debt. I am not sure the true fault of debt is always on those who feel forced to get loans. Just my opinion.

 

[richardnz]

Charles Spurgeon wrote an article on debt in "John Ploughman's Talk" available on the Spurgeon Archive. He strongly condemns debt of any kind, and when I was a child in the 1960s I remember my father telling me that only people of low repute borrowed money to buy things. In those days if you could afford something it meant that you could buy it out of your savings without jeopardising you financial stability. Now if you say you can afford something it means you think can keep up the interest payments. Prov 22:7 et al makes it clear that being in debt is not a blessed condition, but sometimes debt is necessary for survival. Israel was to be so blessed that they were to be able to lend to many nations."For the LORD thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee." Deut 15:6. Calvin says that contentment is the chief of christian graces, and how wonderful it is if you can be a christian who is happy with what he has, and is able to give or lend money to those in need.

 

[Jack K]

The tenor of the Proverbs is that we should be responsible and wise with our money. Given the costs of buying vs. renting, the tax laws, the availability of insurance, etc., the wise and responsible choice in many cases today is to take out a modest loan.

 

[richardnz]

The tenor of the Proverbs is that we should be responsible and wise with our money. Given the costs of buying vs. renting, the tax laws, the availability of insurance, etc., the wise and responsible choice in many cases today is to take out a modest loan.

JK, agreed that Proverbs says we should be wise with our money, but does that book of practical divine wisdom speak anywhere of the benefit of debt? As far as I can tell the Bible as a whole speaks of debt in negative terms. So if being in debt is not good, why do we borrow money? Usually because we see financial advantage in the long term. As you say, we weigh up the costs of buying vs renting etc and decide that going into debt will be the more profitable course of action. This is also true of business debt and education debt. The obvious danger in these considerations is that we do not know the future. Interest rates rise and fall, our employment situation can deteriorate through layoffs and sickness and if we cannot pay our debt we bring dishonour to Christ because “The wicked borroweth, and payeth not again” Ps37:21. When we go into debt with a 15yr loan we are promising to repay we are showing great confidence in our ability to forecast our earnings a long way into the future. If our aim is to buy a house or an expensive piece of machinery for a business or an expensive education, (let us presume that this aim has godly motives and has the Lord's approval) would it not be better to seek these ends by a method that does not involve debt?