The media continues to write premature obituaries for housing finance majors Freddie Mac and Fannie Mae with a certain amount of joy. Is it really called out? If the federal government actually manages to close the two strategies, it would be a good thing for homeowners in America? America raised on a steady diet of 30-year mortgages and 40 years for about half a century now. With these two housing finance companies out of the race, the Americans might as well forget the mortgage options practices like these.
Most borrowers, those who live in cities and in rural towns, in particular, could see the very high interest rates become almost the rule (although suburban home buyers could be spared). And private lenders, knowing that there is no calming influence over the government can begin to charge you all sorts of features for a regular loan every day you have always taken for granted. For example, if you were talking to a lender for a loan, and you want to lock the interest rate before you take the loan now, which could cost you.
Republicans and Democrats do not like Freddie and Fannie. And both would like to see these two walk off into the sunset, finally. But it will be a slow process. Nobody wants to leave America cold turkey. Why everyone wants to see the last of the two mortgage giants? It is easy to understand. Although both created to make it easier for consumers to buy mortgage loans, the companies decided they did not want any part of the American public. They just wanted to use whatever means they had to make their shareholders rich - a strategy that has cost billions of dollars in taxpayers' money.
Yet even when Freddie and Fannie are finally dissolved, not everyone want the government to do something to make the year 30 and 40 years mortgage one option that the average person can benefit. The crisis in housing finance in 2008 shows in particular that you can not have a housing market that depends entirely on private loans.
The mortgage 40 years arrived about an act of Congress in 50 years. Since then, almost all long-term loans such as this have issued because the government was willing to guarantee it. No private lender has regularly aere investors willing to take such a long-term bet. Any investor can hope to dead before you see any loan is repaid. Anyone willing to make such a loan usually requires a larger down payment and a credit score incredibly high. In fact, it might not a bad idea in a country where people buy houses they can ill afford.
Experts believe that 40 years the mortgage is a major reason the system of housing finance in America is falling. It usually borrowers pay the same interest rate forever, even when interest rates fall. Nevertheless, these types of loans are to subprime borrowers - those who are not able to pay an appropriate payment down. And as everyone knows, those who pay a low down payment are more likely to default. Maybe it's good that the long-term mortgages are at their end. Most countries do not have all the same
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