The Big Think

October 24, 2014

Can’t Afford a House? Don’t Buy One

Filed under: Education — jasony @ 8:48 am

Can’t Afford a House? Don’t Buy One: “When legislators and activists say that we need low-down-payment loans because most people couldn’t possibly save up for a 20 percent down payment, what they’re really saying is that people can’t actually afford to buy a house. Helping them to go buy one anyway is not a great idea; it will work out well for some, to be sure, but it will have tragic consequences for others, and for the housing market as a whole if there’s another downturn. We just spent six years learning, the very hard way, that you can’t borrow yourself rich. That knowledge is too expensive to throw away so easily.”

Remember in 2008 when everyone had just discovered that all those sub-prime and low/no-doc mortgages were the cause of our economic wreckage? Well:

The Center for American Progress: “We shouldn’t obsess about down payments,” said Julia Gordon, director of housing policy. “Research confirms that low-down-payment loans to lower-wealth borrowers perform very well if the mortgages are well-underwritten, safe and sustainable.”

Hello? Hello? History is calling and wants its lesson back. It was wasted on you.

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