4.5 % mortgages for "new" buyers for 30yr fixed..not a panacea

[SoCalDem]

Here's why.. It's a bon mot to the BUILDERS who are sitting on shit-loads of unsold homes...but it's unavailable (or planned to be) for re-fis or for people "in trouble" with their current mortgage..

and

there's an upper limit of over 400K for the mortgage, which is waaay too high for my thinking.

I know that certain areas of the country have high prices, but facts are facts.. If you are making 40-50K a year, a 200K house will cost you close to 1500 a month (piti)..even at that low rate.. Giving a "break" to people who can afford TWICE that is not going to make a big enough difference in the macro sense of things.

and anyone who has ever bought & sold houses, knows that when interest DROPS...house prices RISE..and freeze out even more people who cannot afford to pay a huge payment.

There will be NO "help" for people who have problems right now, because the whole thing is so damned messed up, they probably cannot even figure out how to start..even if they wanted..

The "easy" fix for them is to recapitalize Fannie & Freddie, and offer big bargains for the wealthiest people (who have money for a down payment & who can pass muster on the credit check)...and taxpayers get to "help"..but GET no help..

[Warpy]

1. Unless they want to give these folks steady employment

at a livable wage, they can cut the mortgage interest to 0% and they'll still get no takers.

Affordable mortgages are affordable only if applicants have income.

The problems are JOBS and WAGES. All other problems have come about because there is too little of both.

[SoCalDem]

5. Exactly.. There are people who could "afford" a house

BUT

if they know their job could end, why would they buy?

only the wealthiest who don't have that worry, will be able to take advantage of a "deal".. they will buy up houses, rent them out and sit on them for a few years until prices rise, and then sell them for a profit.. This "plan" is just a way for people to "invest" in a tangible asset with less rick than the
market"...and it keeps "their" money circulating to builders..who are well-known to be political donors:(

[hedgehog]

2. At one time, 4.5% was the standard rate for a home mortgage.

It's how my folks bought their house back in the 50's. We've been paying off a very modest mortgage for 20 years now, and our rate started at 12.5%. We refinanced a couple of times, and now anticipate paying off our 4.5% mortgage in about 5 years. Ironically, if we had had a 4.5% mortgage from the beginning, it would have been long ago paid off and I wouldn't be taking out loans for the kids' college tuition or carrying any credit card debt now!

[BlooInBloo]

3. Who claimed it was a panacea?

(I'm new to the entire story.)

[SoCalDem]

6. Money-honey & gal-pal on CNN.. they were almost giddy

at how wonderful this will be:puke:

[Myrina]

4. ... not to mention ...

... its almost a re-creation of the 'buy what you can't afford' market that created this mess.

While there's no indication that these rates will ARM, still, people who should be buying carefully - or not at all - will be enticed into buying a home they may well not be able to keep considering where property taxes and other home-ownership-associated-expenses are going to need to go to start rebuilding infrastructure, etc ...


:shrug: BUYER BEWARE!

[TexasObserver]

7. If they offer low interest loans for new homes, it's a boondoggle for builders.

If these guys give builders of new homes an interest rate a point lower than for refinances, it is yet another example of our financial overlords taking care of selected industries while giving homeowners and consumers the finger.

[FloriTexan]

8. They aren't passing on the breaks...

I don't recall interest rates ever being this low. Despite that, in 2004 we refinanced to 5.65%. For the last couple of years now we have been trying to refinance with some cash out or get a equity line to do some work but the best refinance rate we could get was 7% and that was after the fed rate dropped below 3%. The best equity line we could get was around 12%. We walked away from both. hubby and I have credit scores in the mid to upper-700s. No more credit cards either. They don't care about the consumer. If GM goes under and it looks like its going to then my 2007 GM vehicle will be worth zip and I still have a bit of a note on it. Maybe I'll go buy a new car from a company that isn't going under because at least a car company in good standing will LOVE to see us walk in the door about now with a good credit rating and some cash in hand. Then I'll stop paying the note on my GM car because they don't care about us, never did. Yes, that will totally screw my credit rating, but it will also totally screw them too- let them try to sell the GM. I bought American when I didn't have to and I pay my bills on time, often early and I don't just make the minimum payment either.

[TexasObserver]

14. They don't want to give interest breaks to refinancers.

That won't help anyone but consumers.

[K Gardner]

9. An economist on MSNBC today said all this was speculation, and this was just an idea "floated"

to see what the reaction would be.

I agree with your assessment. The only people qualifying for said rate would be the ones who didn't need it.

[sufrommich]

10. Do they not understand that it is people who are ALREADY

homeowners who are in trouble?

[SoCalDem]

11. They understand perfectly.. who gives more campaign cash

and under water home-buyer or a Homebuilding Construction company owner?

[leftofthedial]

12. just another scam.

[ContinentalOp]

13. 400k is too low, not too high. Not only would it be a bailout of the builders...

but it would only bail out home builders who overbuilt in stupid areas where there wasn't any demand. And anyway, it's not about people who can "afford" twice that but people who live in places where there simply is NO housing available for purchase under $400k.

[SoCalDem]

15. But realistically, if one is making 40-50K, they should not be buying

and could not afford a $400k+ house...and people who can afford to pay $3-4K a month in piti, should not be the ones who get "help"..

50K people "buying" 400K houses is what helped lead to the foreclosure mess..