Comments on: Lower mortgage rates aren’t the answer

By: Susan, Mason,Michigan

Susan, Mason,Michigan — Wed, 18 Feb 2009 15:33:33 +0000

Yes, we need lower mortgage rates, and also need to re-adjust the true value of real estate and the loans on them. Mortgages should be pro-rated to reflect new principle values. If you’ve been paying on your mortgage for 8 years and half of your house payment is going to pay interest, then it should remain so on your new, low rate, real value loan. Adjusting property values and lowering interest rates would help bring monthly payments down, and adjusting property values would also reduce state property taxes, but more people would be able to pay them. I live in a state where property values have fallen by about 50% (more in some areas). In addition to that, my job was cut from full time to half time. That resulted in me having to pay a portion of my health insurance costs, out of half the amount I made before. I’m single, so there is no spouse to help pick up the bills. I’m still making my mortgage payments, but just barely. What is in the stimulus package that will help people like me? Is it fair that people who were greedy and took equity out of inflated property get help, and folks like me that are still working but making less, get no help?

By: RBH fort atkinson, wi

RBH fort atkinson, wi — Tue, 09 Dec 2008 17:15:24 +0000

Rates are the lowest they have been in decades. Of course they are not too low. People are just spoiled. They over extended themselves and used the equity in their homes as credit cards thinking the party of increased values would last forever. Nothing lasts forever.

By: Maria

Maria — Mon, 08 Dec 2008 09:18:42 +0000

They just don’t get it.
People can’t spend their way out of this one.
What is needed is VERY tight regulation.
Who is going to bell the cat?
Wake up America!
You can’t spend your way out of debt.
No debt is good.
Debt is ALWAYS BAD

By: Sheila, Pasadena, CA

Sheila, Pasadena, CA — Sun, 07 Dec 2008 09:12:56 +0000

Refinancing was a major source of the problem. People refinance and pulled hundreds of thousands out of their homes.

It is bad business to refinance an upside down loan. However, the goal of the refinancers is debt forgiveness, i.e. bailout!

That is blatantly unfair to everyone who used commonsense.

By: Pat, Los Angeles, CA

Pat, Los Angeles, CA — Sat, 06 Dec 2008 09:31:40 +0000

Much of the foreclosures are due in large part to refinancing.

I’ve seen on average $200,000 pulled out of homes.

Why in the world should this type of greed and carelessness be rewarded?

Anyone who pulled $50,000 or more out of their homes deserved to loose it.

By: aCA

aCA — Fri, 05 Dec 2008 19:34:49 +0000

great idea…althogh it should also apply to refinancing…more money in people’s pockets – more spending…wouldn’t that stimulate the economy?

By: Carl, Bay Area, California

Carl, Bay Area, California — Fri, 05 Dec 2008 17:38:28 +0000

RATES ARE TOO LOW,
NOT TOO HIGH!!!
The problem we are in was caused by this simple fact, and now they want to continue to stick the finger in the eye of simple economics. Sure, property tax revenues will remain high but these properties are overvalued. Why can’t the “brightest of our economists strategists figure out what my 7 year old can?

By: Marcus. Vallejo,CA

Marcus. Vallejo,CA — Fri, 05 Dec 2008 17:02:36 +0000

I agree, the rate is incidental to the real problem…Inability to pay. It is more than just mortgage rates that need to be reset in our new world. Indeed, everything that we all thought we knew about finance has been changed forever.
The only fair and sustainable means to calculate the value of a home is to equate it to ones income. On a national scale, that means we are “done” with the declines when a “median” home sells for about 3x the “median” gross wage. This is a good thing for the “free-market” guys to remember… If you wipe out the middle class, EVERYONE falls with them.

The average house price needs to drop to the $120,000. Then the homes will be affordable and effects of the rates won’t matter s much

By: Rick, Augusta, Georgia

Rick, Augusta, Georgia — Fri, 05 Dec 2008 16:32:52 +0000

This column reminds me of the weather “experts” who always say, “It won’t help” whenever it rains in the middle of a drought. It certainly won’t hurt! If lower mortgage rates allow some people to refinance or purchase a home, it may not be the final answer, but it certainly helps. Those people can get about stimulating the econimy in other ways. Everything gets moving again.

By: mike nyc

mike nyc — Fri, 05 Dec 2008 15:42:00 +0000

mortgage rates aren’t the answer. neither is saving all the troubled homeowners who are at risk of foreclosure. say what you want, but the foreclosures must happen, and inventory must grow. i feel bad for everyone with a PHD in economics. a waste of time and money. when you boil everything down it is the most basic concepts of a market economy that are at hand.

By: Sandy, Los Angeles, CA

Sandy, Los Angeles, CA — Fri, 05 Dec 2008 07:33:34 +0000

YES, YES, YES, MORTGAGE RATES ARE TOO high!!!! Prices, too.

I am currently looking and I have excellent credit.

I am one of those who sat out the irrational exuberance of the inflated housing market.

I chose to go without while everyone celebrated their great “Fortune” (at the time). It was not easy. I wanted a home for my family like everyone else. I just could not stand to pay those outrageous prices irregardless of so-called market prices.

And now they’re feigning ignorance. Huh! Give me a break! Yesterday they celebrated.

By: Kerb, Tampa FL

Kerb, Tampa FL — Fri, 05 Dec 2008 06:16:04 +0000

we have an excess of houses, an excess of automobiles, and an excess of unsold retail items. Who doesn’t understand that houses, autos and retail items are not selling because the majority of us CITIZENS DO NOT HAVE MONEY, OR JOBS!!!! Have you seen the prices of food lately?? And forget medical insurance, we can’t afford to even see a doctor or dentist because THEY CHARGE TOO MUCH!!!

By: Ron Shea, Peoria, AZ

Ron Shea, Peoria, AZ — Fri, 05 Dec 2008 04:35:28 +0000

You have a good article on CNN. I am a Realtor here in Phoenix, AZ. I continue to see what a mess this housing mess really is. Since there are way more homes than there are people to buy them, even at 4.5% mortgage rate, I think I have the solution.

Have towns target those homes that are old, have been vandalized or just not maintained their value. Bring in the bull-dozers and tear them down. First it will reduce the number of homes in an area and reduce the inventory. Second, those working on the demolition of homes and the cleanup of the debris have jobs. Old homes that need too much work will be plowed down. The land will then be open for new construction.

While this sounds easy, it comes with a cost. A house sitting vacant for years is not getting an occupant who would be paying taxes on the property. New construction would generate work for builders and probably higher tax revenues for a city.

I have been touting this idea for some time and I think that some cities in Ohio are actually doing this.

By: FAIRTAX, Denver, Colorado

FAIRTAX, Denver, Colorado — Fri, 05 Dec 2008 04:35:04 +0000

LOWER RATES ARE THE PERFECT ANSWER. Loan modification programs are already under way for millions of home mortgages by the lenders servicing them. LOWER RATES TO 3% and the refinance boom with the buying boom will stabilize home values and free up income for consumer spending to buy cars the CHryslers, FORDS and GM need to sell as well as other sectors of the economy.

By: Ralphie, Cleveland OH

Ralphie, Cleveland OH — Fri, 05 Dec 2008 04:22:51 +0000

I think a way to get the economy rolling again would be for government to let the people keep more of their hard earned paychecks. I really believe low taxes are the key to an economic recovery. Maybe with government collecting less for itself it would have to start to downsize (what a wonderful thing that would be, fat chance of that happening however). Also another thought would be a moratorium, say for three to six months of all sales taxes on motor vehicles, just maybe that would be just the trick for people to start buying new or used cars and trucks again (once again fat chance of that happening) but if it did happen maybe just maybe we could start to get the auto industry going toward recovery, oh well just my thoughts, thanks.

By: Ken, Tulsa Oklahoma

Ken, Tulsa Oklahoma — Fri, 05 Dec 2008 03:53:46 +0000

Lower mortage rates are an awsome idea and will help a good majority of the population for years to come. For the people that live in NY , NJ or CA ect.,you really should move to a better part of the country. The taxes you pay and cost of living in those areas is insane!

By: Anonymous

Anonymous — Fri, 05 Dec 2008 03:41:24 +0000

It is not the mortgage rates, or the current house prices, it is the twisted mortgage products that pulled too many financially disqualified home buyers as well as some opportunists into the trap. The market is now correct the trand by itself.

One thing few people have said is the fact that the bust of the housing bobble was also contributed by the job losses which were triggered by the crazy energy price in the last couple of years. The big oils need to be investigated seriously.

By: KC OC CA

KC OC CA — Fri, 05 Dec 2008 02:30:18 +0000

I am a licensed Mortgage Banker have been for 6 years. I also have a Masters Degree in economics. Economic theory is very flawed hence the statements that they are just making saying we are in a recession and have been in one since last year. What type of garbage is that? My 3 year old knows we are in a recession! But up to last month they were saying no not in a recession GDP isn’t negative yet, that is the economic theory at work.
It took us a while to get into this mess there will be no magic wand to get us out over night, period. Lowering the rates is the best idea and should have been done before bailing out Wall Street and before values started plummeting, people could have got out of the ARM loans they were in.
Banks ARE lending don’t listen to the media. I do loans all day long. If you have good credit you can get a great deal if you have bad credit you can get a decent deal through FHA up to 97%. People aren’t homeless; they can get an apartment till they fix their credit, quit being dramatic (media again).
If you bought an over priced home that is your fault for buying in a sellers market I have no sympathy for you and your “keeping up with the Jones’s” mentality. If you bought a home you couldn’t afford, I have no sympathy for you either, loans aren’t made to children or the mentally challenged you are an adult act like one.
Lowering rates will help current home owners that aren’t upside down get lower payments; they won’t have to take equity out to see savings at 4.5%. Older people on fixed income with plenty of equity can refinance into lower payments. This will help with cash flow and they will have money to spend on retirement investments and in the retail sector (think home improvements etc). People that aren’t affected by the downturn (yes many people still make lots of spending money and put 50% down) will start buying vacation, investment and second homes at .70 on the dollar with low rates. New home buyers will get good deals at low monthly payments. This will slowly help the over supply and declining market areas stabilize. This in turn will help out the people who bought homes for more than they were worth with no or little money down.
Mortgage companies using tighter guidelines will do better loans, guidelines should not change they should remain tight with a little more flexibility to people with good credit. If you can’t make your car payment on time you should not own a home.

It should have been done first and I would really like to see the bail out Tab when it is all said and done to see who really owes us tax payers!
Oh yeah..
Merry Christmas Everyone!

By: BJ, Hyannis,

BJ, Hyannis, — Fri, 05 Dec 2008 02:03:07 +0000

It’s all about the monthly payment, being a combination of the mortgage amount and the related interest rate. In order to stabilize the real estate values, homes have to sell. Homes will sell if interest rates are at 5.00%, even moreso if the 30 year fixed rate is at 4.50%. Every borrower should get the benefit of the lower rate: refinancers and those who are upside down, as well as purchasers.

I’ve been in the mortgage industry for more than 20 years. Low rates will get this train moving again. Then other improvements will occur in the economy. But something needs to get positive momentum going and lower interest rates will do it and do it quickly.

Think tank “experts” have their head in the sand about this issue. Take a step back and think “Do I have a mortgage rate higher than 6.00%?” Do the numbers, for a mortgage above $200,000 it’s definitely worth refinancing. And you can get a zero closing cost loan for 5.50%.

$200,000 loan at 5.00% is $1073 per month. After deducting interest and real estate taxes when filing your 1040’s in April, its cheaper than renting a 1 bedroom apt. in most cities! And there is plenty of money to lend, and programs to finance purchases. FHA, VA, USDA, etc. are all low downpayment programs and one doesn’t have to be a 1st time buyer.

Make financing affordable and buyers will be storming real estate offices like it was Black Friday!

Put it in effect for the 1st 90 days of Barak’s term and see what it does. Can’t be any worse than all the bailout money we’ve committed elsewhere and certainly more attractive an idea than giving money to those “knuckleheads” from GM, Ford, and Chrysler who still don’t have a business plan for the $$ their asking.

By: Vince, Glendora, CA

Vince, Glendora, CA — Fri, 05 Dec 2008 01:56:21 +0000

In 2004 I sold my house in Southern California for 370k. A house that I paid 150k in 1993. This house was built in 1960 and was 1100sf. The pipes were rotten, the windows were old leaky wooden panes, the walls were uninsulated. I had a choice to either sell or remodel. I sold it the first weekend with over 50 people looking at it. I am a daytrader in the markets and use the same theory to trade. Buy LOW Sell HIGH. I would not buy my old house back at anything over 200k and that is with the new owners upgrades. the prices are currently at the 370k I sold it for. Looks to me like another 20-30% lower will afford my income at 80k per year.