Mortgage Calculator: Why You May Not Need One For A While
You may not need a mortgage calculator for the time being.
You know what mortgage calulators are, right? There are dozens of these calculators available online. Just Google: mortgage calculator. Some of these will let you know how much mortgage you can afford, how much your monthly payment will be (even including tax and insurance). You can even compare one mortgage offering from the next.
But all that may not matter for a while. It seems that over half of all mortgages sold in the U.S. come from only three banks these days: Banks of America, JP Morgan and Wells Fargo. Seems many banks want nothing to do with mortgages.
Its a nice deal for these big boys. You see the mortgages they sell these days are guaranteeed by the U.S. Treasury, so there's no risk to them. They just collect a fee for putting the deal together, then sell the mortgage to Fannie Mae and Freddie Mac (remember them?). Once they're sold, the Treasury guarantees all the mortgages at Fannie and Freddie.
Remember Fannie and Freddie are basically bankrupt, if not for the government backing. But the government won't let them collapse because they want them buying up mortgages. They want them buying mortgages so that the housing market keeps breathing - you know, so that houses (at least some) continue to be bought and sold. It's considered an emergency measure.
So if you've only got a couple of choices in the mortgage you get (if you can get one in the first place), all these mortgage calculators aren't so necessary or useful, I guess. But at least you've got a chance at getting a mortgage from at least three banks.
Now, there's only one problem with this "emergency" measure: it may become permanent. Everyone's getting kind of used to the government backing up mortgages. If the government backs off, the banks may not be in the position to sell mortgages. After all, no one's sure what kind of shape these banks are really in. You remember all those defaulting mortgages that banks have been "writing off" don't you? Well, they may have even more to write off in the coming months. They're just not telling us yet.
So for now, it looks like the taxpayer will continue to take the default risk on all these new mortgages.
What's it all mean? Well, "the taxpayer" is us. So you and I will continue to take all the risk while these big banks get to collect the fees from originating and servicing these mortgages.
So stop wasting time with your mortgage calculator and get out and work harder. After all, we're going to have to come up with money to back up all those new mortgages if any of them go bad.
You know what mortgage calulators are, right? There are dozens of these calculators available online. Just Google: mortgage calculator. Some of these will let you know how much mortgage you can afford, how much your monthly payment will be (even including tax and insurance). You can even compare one mortgage offering from the next.
But all that may not matter for a while. It seems that over half of all mortgages sold in the U.S. come from only three banks these days: Banks of America, JP Morgan and Wells Fargo. Seems many banks want nothing to do with mortgages.
Its a nice deal for these big boys. You see the mortgages they sell these days are guaranteeed by the U.S. Treasury, so there's no risk to them. They just collect a fee for putting the deal together, then sell the mortgage to Fannie Mae and Freddie Mac (remember them?). Once they're sold, the Treasury guarantees all the mortgages at Fannie and Freddie.
Remember Fannie and Freddie are basically bankrupt, if not for the government backing. But the government won't let them collapse because they want them buying up mortgages. They want them buying mortgages so that the housing market keeps breathing - you know, so that houses (at least some) continue to be bought and sold. It's considered an emergency measure.
So if you've only got a couple of choices in the mortgage you get (if you can get one in the first place), all these mortgage calculators aren't so necessary or useful, I guess. But at least you've got a chance at getting a mortgage from at least three banks.
Now, there's only one problem with this "emergency" measure: it may become permanent. Everyone's getting kind of used to the government backing up mortgages. If the government backs off, the banks may not be in the position to sell mortgages. After all, no one's sure what kind of shape these banks are really in. You remember all those defaulting mortgages that banks have been "writing off" don't you? Well, they may have even more to write off in the coming months. They're just not telling us yet.
So for now, it looks like the taxpayer will continue to take the default risk on all these new mortgages.
What's it all mean? Well, "the taxpayer" is us. So you and I will continue to take all the risk while these big banks get to collect the fees from originating and servicing these mortgages.
So stop wasting time with your mortgage calculator and get out and work harder. After all, we're going to have to come up with money to back up all those new mortgages if any of them go bad.
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