Friday, February 8, 2008

Good News?

Well, it looks like the government "stimulus plan" is on it's way to final approval. But is the part about raising the maximum government-sponsored loan limit to $729,750 really a good idea? It's true that these types of loans will enjoy lower interest rates, but will they help the homeowners already in distress? I don't think so.

I think these higher limits will "help" others get into houses that they can't afford. If your loan amount is $729K and your downpayment is 10-20%, then your purchase price is between $800-$900,000. Let's say your interest rate is a low 5.5%, then your monthly principal and interest payment will be $4,143. Add taxes and insurance, and it may very well skyrocket to over $5,000.

It's only effective in some states. And, as the article points out, the government is targeting "working-class homes." This is a total disconnect to me. Yes, in some of the expensive states, the average home can be as high as $800,000 or more. Yes, many of these are two-income earners who still have trouble making ends meet. But, now that property values are falling, you're able to buy more than just a "working-class home" for between 800-900K. I think if they want to help the "working class", having a program that aids buyers in purchasing larger unaffordable homes isn't the best place to start. In the neighborhoods with the highest foreclosure rates out here, the homeowners in distress are sitting on mortgages that are no larger than $400-500,000, at the very most. Many of them are between 300-400K, while the house values are much lower. That's the problem.

If you have two or more loans whose values add up to the new limit or less, it could be very useful to refinance them all into a lower interest mortgage. But what if your house isn't worth that much anymore? Oh, sorry, this program won't help you, either. It'll be interesting to see the effect, if any, in the next year or two.

On another note, my daughter's sick. I think the other one is on her way.

Last Saturday evening, we attended an event. We were running late and I had to switch purses because the everyday brown didn't match my outfit. So I grabbed my little black ditty, transferred a few items, and dashed out the door--with my husband and the entire brood waiting for me with the engine running, as usual.

After we arrived, shook hands, gave hugs, and kissed a few people, I reached into my purse, but didn't feel that familiar pink bottle of alcohol. I HAD FORGOTTEN MY SANTIZER!! I wasn't able to sneak away to wash my hands all evening, and, of course, there was my preschooler with her fingers in her mouth. Right on cue, my daughter came down with a fever on Wednesday afternoon (please note: that's the date of my post that states, "Can't be too careful, you know. Do you have any idea how long it takes for a virus to work through my family?"). We'll have to see how the next few days go around here.

No, that isn't good news. But this is: my husband is a genius (seriously, I'm not being sarcastic--I really mean it this time). After the thorough search of the van yesterday (I was going to take pictures of what was found, but I really didn't want to gross you out), he remembered the little black purse from Saturday night. There, tucked in my secret compartment, was my driver license!! It was one of the few things that I remembered to transfer over, but didn't see when I was cleaning it out.

After taking a good look at it, though, it probably wouldn't have been a bad idea to get a new picture after all.