The Collected Works of Author and Blogger Larry Roberts

Archive for October, 2014

If government-backed loans carry higher costs, private lending will steal market share and get the government out of the mortgage business. Legislators and bureaucrats who protect the interests of taxpayers want to reduce the government's footprint in housing finance. Realistically, there are only two ways to do this: raise interest rates, or raise the fees on government loans. Higher mortgage interest rates would provide investors better risk-adjusted returns, and higher fees on government loans would make other sources of capital more competitive. Either method would bring more private capital to the market. Of course, rising interest rates is the last thing lenders and housing bulls want to see. Higher interest rates would reduce mortgage balances, make housing even less affordable, and ultimately will either halt appreciation or…[READ MORE]

Reverse mortgages eat homeowner equity through the power of compound interest working against the borrower, much like the growth of cancer cells. I'm not a big fan of debt, in case you didn't notice. I don't like consumer debt, and I really don't like reverse mortgages. I recently wrote that Home ownership with no mortgage is the best retirement plan. It stands to reason that I view taking on mortgage debt in retirement as the worst retirement plan. First, for those who aren't familiar with reverse mortgages, let's define what they are. According to the Department of Housing and Urban Development: A reverse mortgage is a special type of home loan that lets you convert a portion of the equity…[READ MORE]

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