Friday, October 24, 2014

Liberals........ don't know much about history

It really hasn't been that long ago when the housing market crashed into oblivion because people were lending money to other people who were not ready to buy homes.

But hey, let's not less a valuable history lesson get in the way of liberal nobility.

America needs more low-down-payment loans.

That seems to be the opinion of our government, anyway. The government agencies that drive most of the housing market are pushing for lower down-payment standards on mortgages, easing the 20 percent requirement that has become standard for much of the market.

The Center for American Progress approves: “We shouldn’t obsess about down payments,” said Julia Gordon, director of housing policy. “Research confirms that low-down-payment loans to lower-wealth borrowers perform very well if the mortgages are well-underwritten, safe and sustainable.”

This depends, of course, on what you think “perform very well” means. A low-down-payment loan made to someone with a good credit rating and a low debt-to-income ratio will perform better than a low-down-payment loan made to someone with terrible credit and a lot of debt. But it has a higher default risk than a mortgage made to a similar borrower with an adequate down payment, because when you start out with little equity, you’re apt to find yourself in foreclosure if you get into financial trouble.

One of the principle problems with liberalism is that liberals often fail to connect causation with results.

I tell clients all the time, even though the wealthiest people own their homes, home ownership is not why they are wealthy. Home ownership is a symptom of the things that do create wealth........... time and stability.

This year, I have spent over two thousand dollars on minor repairs, lawn mowers and tools, landscaping, and other projects around my house that will never turn into increased market value. This is money that a person would never spend if they rented.

When most people sell their house, they think "I bought if for X and sold it for Y, hence my profit is Z". But they never calculate the $8000 roof they put on or the $4,000 driveway repair, or the $2,500 hardwood floor they installed into the calculation.

Again, all things that a renter would never have to spend money on.

But liberals would have you believe that as long as you can own a home, your three divorces, four job changes and a felony conviction won't matter, cause you'll be rich.

So let's go ahead and repeat the history that nearly brought our economy to a total collapse.


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