Pardon my ignorance on the subject, but, since foreclosures and?
Question:
Answer:
Do you know what we need?
We need them to do an Economics version of school house rock so then at a young age people will learn the economics of the fact that you either can afford or cannot afford to buy something and that no matter how you twist the number you still may not be able to afford to purchase something.
It is because it is in the contract to adjust the rate based on a certain figure and that figure affects other loans as well so if that figure is frozen then a lot of other loans are affected and the economy will be in trouble.
The main problems is lenders need to start saying no to the people that are their 'bread and butter' and people need to realize sometimes they can not afford something and should not buy it.
Buddy let me see if I can digest it for you. The mortgage rate is directly connected to the PRIME RATE - DISCOUNT RATE - FED RATE. PRIME RATE is a rate that is charged for the guy who wants to continue to build houses around you . DISCOUNT RATE is when the banks ask for money from the FED or BIGGER BANKS to give to investors. FED RATE is the rate which deals with everything from credit cards to mortgage. Example. IF THE FED GOES 6% then the PRIME WILL GO UP AND ALL OTHERS WILL GO UP so that nobody losses money. You cannot freeze the MORTGAGE because its not the ultimate index what you should look out for is FED RATE - DISCOUNT RATE. If you do freeze lets say. 6% mortgage and the FED MEETS 4 times a year and the FED raises the rates to 6.25% then all the banks will be losing money etc. Only the consumer will be winning. Maybe its good but the fact is what makes the economy go forward is NEW JOBS, CONSUMER POWER, AND INVESTMENT. So when there is raise in RATES its just a big brother telling you that you go to stop spending money. Think of the FED as a Business owner who gives credit cards to employers to make the business grow. So if he sees that there are spending to much and not enough people are going to buy or enjoy his business he gets the credit card and changes the INTEREST so you wont spend as much. Because you can only spend if you have a good job our other factors are helping you.
More Related Questions & Answers...