Unless you live in a box you have heard about the Democrat's Plan to prevent the foreclosure and loss of 9 million homes in America while not assisting the speculators and those undeserving. This plan sounds just like one of those 'liar' loans that got us into this problem in the first place. Where is their documentation and evidence that they can assist 9 million homeowners?
Current homeowners either purchased homes that they can afford or didn't. If they could afford them then the most common reasons for this changing is the loss of a job or some financial difficulty usually brought on by an unexpected large expense such as health care. Neither situation can be corrected for by the Democrat's plan although these are the individuals most deserving of assistance.
If the homeowners really couldn't afford the home when they purchased it then they deserve to lose the home. Since these folks were speculators in their own way they are not supposed to be helped.
Since we have just ruled everyone who is having trouble holding on to their home as ineligible where do the politicians get off claiming they will save up to 9 million homes? Sounds like all a liar loan to me and more of the same from Washington - so much for Hope and Change.
If only I were competent with graphic software I would 'borrow' the Hope Poster and add another word stretching from the lower left corner up to the right, 'DASHED'. Of course I would give the AP photographer and the artist who created the poster credit.
Showing posts with label Mortgages. Show all posts
Showing posts with label Mortgages. Show all posts
Thursday, March 12, 2009
Friday, December 05, 2008
Home Buying Stimulus - Another Outrage
I read with great joy the governments idea to force down interest rates for mortgages used to purchase a home. Being in the market for a home I can not wait to take advantage of this plan and finally get a little bit of the gold being handed out by the Good King.
Despite my personal glee and anticipation of sticking it to all my fellow taxpayers by having them subsidize my new home I can't move beyond the idea that his entire plan is insanity as only Washington D.C. can do insanity.
The problem with the housing market now was rampant speculation and loose lending standards allowing folks to get into homes they couldn't afford. Now that no one is buying the prices are falling and folks find themselves owing more then they can sell the home for.
What happens with the government plan? With lower mortgage rates the theory is that people will be able to pay up yet still afford the mortgage. This is true but completely ignores the need for these borrowers to have a downpayment. If they pay up they need more cash to complete the transaction for the downpayment and increased loan fees based on loan amount. Based on this the only folks to benefit are those already sitting on cash out of proportion to what they can afford in a monthly mortgage payment, a nice problem to have and one I doubt it prevelant.
Now let's ignore this problem with the plan and assume I purchase a home under the plan. Since I have a low interest rate I was able to pay a higher purchase price then I would have. A year goes by, the low rate plan ends, everyone who could has bought their government subsidized home and I find that I need to sell for that new job I finally got after being laid off after closing on my new home. Surprise, the value of my home has just dropped because all potential buyers are now paying the higher interest rates so they have to offer less to make their monthly payments.
Let's review - If I do what the government wants and purchase a home that I can suddenly afford due to low interest rates I am handing the seller of the home a portion of my down payment as a gift because within a short period of time the home is going to be worth less.
If I plan on staying in my new home for a long time (5 years minimum I would guess, probably 10) none of this might matter which I am sure the politicians will argue but our world and lives are flexible so what if you think you will stay and you can't?
Have I adequately expressed my disdain for politicians in general? This is a plan to artificially puff up the value of homes just like the recent home valuation bubble that burst. Get folks to take on more debt then they really should by subsidizing the interest rate and then remove the subsidy bursting the new bubble.
And let's not forget that all the money the government is throwing around eventually comes out of our pockets via taxes either directly (income) or indirectly in the cost of goods and services.
I wonder how Gov. Palin's budget is doing with the price of oil blowing the bottom out of the barrel in it's rush to be cheaper then the air we breathe.
Despite my personal glee and anticipation of sticking it to all my fellow taxpayers by having them subsidize my new home I can't move beyond the idea that his entire plan is insanity as only Washington D.C. can do insanity.
The problem with the housing market now was rampant speculation and loose lending standards allowing folks to get into homes they couldn't afford. Now that no one is buying the prices are falling and folks find themselves owing more then they can sell the home for.
What happens with the government plan? With lower mortgage rates the theory is that people will be able to pay up yet still afford the mortgage. This is true but completely ignores the need for these borrowers to have a downpayment. If they pay up they need more cash to complete the transaction for the downpayment and increased loan fees based on loan amount. Based on this the only folks to benefit are those already sitting on cash out of proportion to what they can afford in a monthly mortgage payment, a nice problem to have and one I doubt it prevelant.
Now let's ignore this problem with the plan and assume I purchase a home under the plan. Since I have a low interest rate I was able to pay a higher purchase price then I would have. A year goes by, the low rate plan ends, everyone who could has bought their government subsidized home and I find that I need to sell for that new job I finally got after being laid off after closing on my new home. Surprise, the value of my home has just dropped because all potential buyers are now paying the higher interest rates so they have to offer less to make their monthly payments.
Let's review - If I do what the government wants and purchase a home that I can suddenly afford due to low interest rates I am handing the seller of the home a portion of my down payment as a gift because within a short period of time the home is going to be worth less.
If I plan on staying in my new home for a long time (5 years minimum I would guess, probably 10) none of this might matter which I am sure the politicians will argue but our world and lives are flexible so what if you think you will stay and you can't?
Have I adequately expressed my disdain for politicians in general? This is a plan to artificially puff up the value of homes just like the recent home valuation bubble that burst. Get folks to take on more debt then they really should by subsidizing the interest rate and then remove the subsidy bursting the new bubble.
And let's not forget that all the money the government is throwing around eventually comes out of our pockets via taxes either directly (income) or indirectly in the cost of goods and services.
I wonder how Gov. Palin's budget is doing with the price of oil blowing the bottom out of the barrel in it's rush to be cheaper then the air we breathe.
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