Quote:
Originally Posted by Red
It's not just about the $100/month. People should not base their lives on monthly payments. The principal owing is what really counts.
If we didn't have changes to extend to 30-35 and 40 amortizations we wouldn't be paying 500K for 275K houses. We could then afford bigger downpayments and with people less stressed financially we would have more spending at the malls etc. The economy overall would be healthier.
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I totally agree with you, but isn't this just basically like asking for a do-over on the last 25-30 years of economic experimentation?
I keep struggling with the desire to see a correction and feeling some sympathy for people who ended up buying during this time period at the inflated prices that easy credit led to. Sure, there are some that used it as an opportunity to go bigger than they should have, but the whole market was affected so even if someone tried to stay within their means they paid more than they should have.
As I see it, this whole credit/financing mess has been slowly building for decades and now we want to try to correct it almost overnight. So much of the "wealth" that allows people to spend so much at the mall is directly tied to those easy financing terms and low interest rates, when was the last time you had someone talk about their new car in terms of $x total vs $y/month and how much of that is related to artificial equity in their homes. A forced correction in the housing market has to have an impact on all aspects of our economy due to the type of world we've created, doesn't it?
I'm a pretty simple dude, though, so I'm likely missing something.