So I scan the news from time to time and this article caught my eye.
Now I'm all for helping people become more financially secure. In fact I like the idea of being financially secure myself (I'll let you know when that happens). But it does strike me as just a little odd that the President of the United States would be talking like a mortgage salesman. Quite frankly it bothers me.
Regardless of any controversy of any stimulus package or packages, whoever approved them for whatever reason (not really interested in debating that point at the moment), I do not think that the President of the United States has any business telling people to go out and refinance. No business whatsoever.
When the President says "That is money in their pocket." I suppose he is referring to the millions of people expected to take advantage of the lower rates. But my question is whose pockets are really getting the money? A loan is a loan and interest is interest and as long as people are paying interest to banks then the banks are getting the money.
A person can refinance until the cows come home but unless there is a job to pay the new mortgage with it makes zero difference. A person can refinance a hundred times but if they don't have the income to support the 140% of the value of the home they own they still won't be able to pay it. A person an apply for a hundred loans but if their credit is completely destroyed because they haven't been able to pay their bills for the last year it makes no difference. In which case there is zero money in anybody's pockets (unless, of course you are a bank and received a handout to subsizide not giving loans to people whose credit has been destroyed because they don't have a job and couldn't pay their bills.)
In short this is no more economic reform than is Entrecard buying back credits and will have no more benefit for the economy that the latest sales at Wal-Mart. Offering a government backed discount on any product is dangerous at best. Doing so to this degree is shameful and quite possibly disastrous.
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Ah, common sense. A true rarity these days.
ReplyDeleteYou're completely right -- the feds have bought a bunch of low interest rates, for sure, but I rather doubt that will result in scads of people going out and buying homes. Oddly, the banks have gotten much more restrictive in loaning money and require down payments (for the most part).
To get that interest rate, then, you've got to have a down payment. To have a down payment, you must save money and Americans haven't been encouraged to do that for years.
Who benefits, then? People wanting to refinance, possibly, and folks who can afford to purchase a home regardless of what the mortgage rate is.
Strange times, these...
The Hawg
Your are right...the president has no business telling us to do this. No business at all.
ReplyDeleteHave a terrific day. :)
It seems to me that the President is only making suggestions to those who can benefit from refinancing. Trying to prevent more people from getting into financial trouble sounds like a good idea to me. You're trying make it sound like that's Obama's answer to end this recession. If Obama wants to give advice, what harm can it do? You have a free choice to do what you want.
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