My prediction is that if this Missouri program gains traction we will see increased rates of foreclosures for these "home buyers".
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Thursday, May 7, 2009
Duplicating Disaster: A Lesson Not Learned
According to this New York Times article, Sweetening the Pot for Home Buyers, the $8,000 Federal Tax Credit for first time home buyers created by the Obama administration will not have much of an impact (I believe I told you this previously) due to most first time buyers not having enough money for a down payment and to cover closing costs. The article trumpets a Missouri plan that allows home buyers to borrow that $8,000 to buy that home and then to repay it when they receive the tax credit. In my opinion, this is a recipe for more disaster. The problem was and is that TOO MANY FINANCIALLY UNQUALIFIED PEOPLE PURCHASED HOMES. Offering this "loan" will only exacerbate the problem. If a person cannot find a way to save $8,000 to buy a home then they should not be buying a home. What happens when the roof leaks, or heating system needs replacement, etc.? These "home buyers" do not save money, they spend. That is why they could not even put together a measly sum like $8,000 to buy a home. The problem is that we have turned owning a home from a privilege into an entitlement. When will we learn!?