30 Year Interest Rate
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Mortgages with a 30 year interest rate are a benchmark for the industry and in many cases offer the best value for the buyer. These types of mortgages offer a fixed payment, and generally represent a good mix of price, stability and investment if the buyer plans to stay in that location for a while. Other mortgage options, such as a 15 year interest rate, offer a greater savings in interest costs over the long run than a 30 year interest rate, but fewer people meet the requirements for a higher down payment or a larger monthly payment which are necessary to obtain this type of financing on a home.
Adjustable rate mortgages carry their own perils. Although these alternatives to a 30 year interest rate mortgage are a reasonable option for those who do not plan to stay in a home long enough for the balloon payment to take hold, uncertain markets make this a risky gamble, especially if the owner would not be able to afford the higher payment required when the introductory period ends! Uncertain times carry the risk of job loss, as struggling firms attempt to cut costs. Even if the seller is financially stable, there is nothing which guarantees that a buyer will materialize on schedule. In a market with plenty of available alternatives, a buyer may not be willing to pay the amount which a seller needs to obtain in order to clear his own mortgage debt.
Presently, mortgage rates continue to fall. The 30 year interest rate has dropped regularly, and other types of mortgages show corresponding effects of the struggling economy. The Federal Reserve is presently dealing with bailout requests from various industries. Falling interest rates are generally seen as a sign of a recession, and many fear a global depression scenario if markets in the United States can not be stablized. Already, the economic situation in the United States has shaken the stock markets worldwide. However, lawmakers hesitate to meddle with conditions which may settle themselves through market forces. There is also the possibility that unintended and perhaps harmful consequences may result from manipulating markets.
Aside from these concerns, there is always the very practical problem of where to draw the line on the many who would gather to demand their own share of bailout funds. Dropping a 30 year interest rate mortgage a few points is a much different prospect than handing out taxpayer money to solve seemingly endless industry problems. This is especially true if the government begins to bail out private companies. After all, if one industry gets a helping hand, others may reasonably argue that their interests are equally crucial to overall market stability. Many people believe that present conditions are mainly the logical result of unwise decisions made on the basis of greed rather than solid financial principles. Subprime buyers were allowed to obtain mortgages which any competent lender should have known were likely to end up in default.
Some believe that the inevitable consequences of such fantasy-inspired decisions should be visited upon those who made these decisions. However, there is an equally reasonable hesitation to ignore the fact that other 'innocent' individuals or industries may also be crippled by allowing the errors to self-correct. People may not wish large companies to receive bailout funds while they themselves continue to struggle financially, yet these very companies may provide jobs which can improve the financial situation in thousands of other families. At the very least, strict conditions (with closely monitored and effective oversight) should be imposed upon the recipients of such funds should they be necessary. Dropping not only the 30 year interest rate, but also other types of mortgage rates may help to stimulate the housing market and cause buyers to materialize.
Speaking of buyers, many who wish to finalize their own mortgages with a fixed 30 year interest rate are concerned that mortgage lenders will find their credit scores unacceptable in this strict lending environment. Lenders are understandably anxious about lending cash to people who may default on their mortgages. Some individuals have advocated that lenders should insist upon a 20% down payment before approving a mortgage. Although this would put home ownership out of reach for many, at least for a number of years, it is an interesting proposition. This certainly would be a complete turnaround from the widespread attitude that home ownership is a right which every individual is entitled to enjoy. Such a restriction sounds shocking at first, but the entitlement crowd may need to realize that while the goal of home ownership is admirable, to believe that everyone is 'owed' such a privilege is far beyond the government's reasonable role. Perhaps such a belief is related to the credit-happy society we have developed, where people are able to spend far more than they can easily repay. At any rate, this restriction would be a reality call for many, and might result in a more guarded use of credit in general, lest prospects for home ownership be endangered by spending beyond one's means.
Some interesting verses in the Bible point out that obtaining a 30 year interest rate upon one's personal dwelling is not a necessity for a happy life. In I Timothy 6:6-8, the apostle Paul writes, But godliness with contentment is great gain. For we brought nothing into this world, and it is certain that we can carry nothing out. And having food and raiment let us be therewith content. Paul is not saying that having adequate shelter is unimportant. Rather, he is correcting a proud, argumentative attitude which false teachers had introduced into the church, where godliness was equated with obtaining great material gains for oneself. Instead, Paul goes on to suggest that believers flee this type of thinking and follow after righteousness, godliness, faith, love, patience and meekness. Rather than pursuing treasures which offer only temporary satisfaction, Paul urges them to seek the One who had gone ahead of them to prepare for them a lasting heavenly dwelling.
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