A coalition of liberal and conservative lawmakers are pushing through legislation to help first time homebuyers gain access to FHA home loans on easier terms. While this may help in the short term I think it may hurt these folks in the long term.
There is a completely different mentality between renting and owning. When you are a renter, you pay your money and someone fixes everything. When you are an owner, the mortgage is just part of your expenses. If you do not maintain the home, and you have no appreciation for a period, you can be hurt much worse than renting.
Add to that a climate in which the Federal Government does not force you to accumulate the downpayment or any personal investment, the determination that you need to own can be lost and all that ends up is these people getting hurt.
What’s the better deal? Consumer-friendly Federal Housing Administration (FHA) loans that carry flexible down payments as low as zero, no prepayment penalties and affordable rates and fees – unlike many sub-prime mortgages targeted to minority first-time buyers.
The coalition supports a bill co-sponsored by members of Congress who are polar opposites ideologically and rarely agree on anything. Called the Expanding American Homeownership Act of 2006 (HR 5121), the bill is jointly sponsored by Rep. Bob Ney, a conservative Ohio Republican, and Rep. Maxine Waters of California, one of the most outspokenly liberal Democrats in the House. via the baltimoresun.com.
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Sorry to disasgree with your theme. Even with the gift program being considered a problem, higher delinquency rates for example, these delinquencies run as a very low percentage of those that are funded. Owning a home has pride, accomplishement, and other factors. I think the best thing for people, for our comminities, and for our country is to encouarage home ownership. To me, FHA is the perfect vehicle. I have been waiting for FHA to replace the gift programs with a real 0 down FHA program.
Another way to look at it is to consider VA statistics. They aren't as good as conventional, even FHA as it is, but they are just fine.
Larry Cragun