Lesson Learned - 30 Year Fixed Rate Mortgage
The common 30 year fixed rate mortgage is a lousy deal for lenders. It’s exists due to subsidies from Fannie Mae and Freddie Mac.
If you follow this thread very far you will quickly find yourself surrounded at the intersection of politics, economics, and finance. Since I rarely learn much in that fray I am going to hang back and look at some interesting facets of the basic fact that the common mortgage in the US does not exist in other countries.
The first thing that strikes me is how little I think about things like home mortgages in other nations. My day to day life usually gives me two typical ways of looking at other countries. One way is how they fit into the international news of the day. These are the events, usually on a military or diplomatic scale, that might arouse media interest outside their borders. The other is as a tourist. These are the cultural, historical, or geographic features that I would be interested in visiting to learn more about. What often strikes me when reading a story like this is the vast sea of everyday life that goes on all around the world. The world is a pretty big place. Sometimes if you stop to remind yourself that people all over it have mortgages, hire plumbers, and go shopping for socks it doesn’t have to feel so big.
The other interesting item to me is the incredible power that the government can use to indirectly impact your life. Often we tend to think of the government in terms of their direct impact: taxes collected, services provides, laws enforced. At the same time, the wires that get pulled that lead to existence of the 30 year fixed rate mortgage are very far away from me. Yet the government is able to pull them so hard that I can feel it every month when I pay my bills.