DES MOINES, Iowa — After years of moving around the country for his job with Marriott hotels, John Eddleman wanted to put down roots.
Last month, he bought a brick bungalow on Des Moines' south side, taking advantage of a recent federal policy change that allows down payments of as low as 3%.
"It came at just the right time because otherwise I would have had to scrape a lot more money together," Eddleman, 49, said. "At 3% down, you can't pass that up."
A collection of new policies — including lower down payment requirements, decreased mortgage insurance premiums and looser lending standards — are intended to make it easier for first-time buyers like Eddleman to get a loan.
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4 comments:
So, now it is the federal government backing sub-prime loans.
They didn't learn from the banks...or maybe they did...
If you don't have a vested interest in the principal, it is soooo easy to walk away in default.
...going back to the same practices that caused a bubble and bust. Great idea.
Problem also is that people are buying homes in economic uncertainty. The government wants us to believe that the recession is over and everything is fine. Hell, gas was down to almost $2 a gallon. Things must be great, right?
I bought my home a year ago. Put down a sizable down payment with very low interest rate and have a reasonable mortgage. But... a year ago I thought my job was secure, now we're being forwarned of cutbacks, layoffs etc. The number of businesses that have closed in Salisbury in just the last year is alarming and guess what? It's not going to improve. More business will close, people will move to find work and property values will plummet.
It used to be that home ownership was an asset and an investment. Not any more. If I could go back a year I'd rent and keep renting. No maintenance costs, taxes are the owners problem and if the neighborhood I'm in changes for the worse I can give notice and move, don't have to worry about unloading a house that was in a decent neighborhood when I bought it but now worth a third or even half what I paid for it.
You borrow $200K for a house at 4.5% and on a thirty year conventional mortgage you'll pay on average double the purchase price. I know how apr's work etc. but in its most simplistic form you're still technically paying 100% of the property value so when you sell...you're still "by the numbers" in the hole, have gained nothing and have paid to maintain that property for all those years. Let's not even get started on capital gains and taxes on the proceeds of your home sale despite already having been taxed on the income you used to buy the home.
The more you work, the more you own, the more the government wil turn the thumbscrews.
Sorry, drifted off topic a little but my point was that not all forclosures are a result of buying more house than the owner can afford, sub-prime loans and deadbeats simply walking away. Whatever the reason it affects the overall economy.
"It used to be that home ownership was an asset and an investment. Not any more."
Actually, if you examine the average increase in value of homes over the past 120 years, you'll clearly see that home ownership does not even keep up with the rate of inflation.
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