Musings: This idea still works for homebuyers
The Federal Housing Administration still offers graduated payment mortgages to qualified homebuyers, a reader writes. Credit: AP/David Zalubowski
Here is a possible alternative to giving first-time homebuyers money. When I purchased my first house in 1979, interest rates for home mortgages were 13%. The Federal Housing Administration offered and still offers graduated payment mortgages, which take a portion of the mortgage payment and accrues it over the first five years and adds it to the principal. After five years, the mortgage starts to amortize with the new principal amount.
The lower starting monthly payment helps new buyers purchase a house with the expectation that their income will grow. The idea behind it is that at the end of five years, they could afford the higher monthly payments.
A proposal to give first-time homebuyers $25,000 would likely lead sellers to increase the home’s price by $25,000, and the problem will not be solved. It might buy votes, but it will not solve the problem.
We need to stop expecting government handouts to solve an issue it created with inflation and high interest rates.
— Kevin McGrath, Northport
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