This is a poorly contrived statement"In reality 30 year mortgage enslaves the middle class with home ownership dangling like a carrot on the end of a stick. The government backstop is the problem that blows the bubbles otherwise nothing wrong with FnF business models. That's why politico's can't reform them. They would have to admit they're the problem, LOL! Ironically, the GSE's market share has only bubbled since seized under Gooberment Management so now we have double bubbles, LOL! So it remains to be seen if Trump will pop 1, or 2 bubbles wink "
The 30 year mortgage encourages home ownership and allows people to move more freely around the country by having people able to borrow money and own their homes.
The biggest problem is the concept of down payment or skin in the game. a 3% down purchase is not enough; there should be at least 5% - 8% or so. at 3% down if the buyer has 10K they can buy a 300K home. that may be too much home for an income that can't create more than 3% down.
At say 5% down that same 10K only buys a 200K home. Less home, less nifty things to sell with it (fancy bathrooms, fridges, cabinets, etc.) go away.
That is the effect of the difference in down payments. But, its not the concept of a 30 year loan to blame its the leverage that is the problem.
30 year loans are just fine; as are 4 year car loans. But car loans with 0 down for 7 years is nuts.
The 30 year loan has propelled our economy for 80 years. Growing up all i heard was the 20% down requirement. Well that went away... to 0% liar loans... that is where we got in trouble. A moderate 5-8% down would be palatable. Its the down payments, coupled with low interest rates that created the bubbles.
Not the 30 year loan in itself.
