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Best Housing Solution I have Seen So Far


Myth465
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30 year loan financed by 5 yr paper? That might be a problem.

 

Furthermore, I know 30 yr mortgages are common, but whenever, I see 30 yr paper (be it mortgages, bonds or government paper) I always see a fella happily swimming along, with the only problem you (never mind him) cannot see the shore anymore.

If you really want to make it easier on people, why tie them down with the Roosevelt invention of 30 yr mortgages? Why not take a tip from the financial gurus at Goldman Sachs and go for 50 yr paper (50 yr bonds issued in 2010), better yet, 100 mortgages should really cut home buyers (I forget, they are called owners) some slack. So, my point is, at what point does the length of a mortgage get ridiculous? Is this not just a different way of kicking the can down the road?

 

Is the better option not to save and then buy? Is the perpetuation of the debt culture not the problem and is the mortgage culture not part of it? Does the benefit of buying a house while taking on debt for 30 years really outweigh saving and renting?

 

My apologies for the dump Myth!

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Didnt catch that they financed it with 5 year notes.....

 

Not a good move. They should have matched the maturity or at least have gone out to 10 - 15 years. I dont have a prob with the 30 year mortgage because its standard, but you have a point. I am still trying to wrap my head around Melbourne property trading at 12 times income. Its not as crazy as it sounds when you are on the ground, but its still crazy....

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Here's a simple solution that I haven't seen anywhere.  Just let people who are underwater refinance.  No mortgage forgiveness, just refi their current principle at today's rates.  Banks wouldn't have to take a writedown cause they are still going to get the money back.  I don't understand why banks don't do this today.  I know someone who bought at the peak, put 20% down, took a 30 year fixed, and bought a house within their means, unlike a lot of others around them.  Now the house dropped in value about 45%.  The bank won't refinance unless they put another 20% equity (80% loan to value), meaning they would have to basically put almost another 40% down, on top of the original 20%, which they aren't going to do.  But it's the same house on the books that's backing the loan so the reality is that it's not more risk since it's the same collateral before or after the refi.  if the banks would just let people who are underwater refinance without forcing them to put down another 20-40% in equity their payments would go down significantly.  The peak was around 2006-2007, so that would only add another 5 years to the loans if they were 30 year fixed...  Or just refi at todays rate for 25 years instead of 30 without requiring a loan to book of 80% on a current property that already has a loan to book of 115%+!

 

It seems like everyone out there wants to help the people who should not have been in their homes to begin with, just to keep them in!  How about helping the responsible ones who got screwed even though they thought they were being responsible?  And in the process not screwing anyone really!?

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