Many critique Wall Street on this mess. Well, folks, yes Wall Street bears some blame, but let me remind you the reader on what was a prime motivator. Read the blog, I really want you to. This blog entry was written in February 2007, just months before this mess was about to start.

Same payment with each scenario…except you’re able to buy $132,725 more home using a 40 year fixed over the 15 year fixed and  $107,750 more home with the 30 year fixed mortgage.    With an interest only product, such as a 30 year fixed rate with a 10 year interest only payment, the savings (or how much more home they could buy) would be even more substantial.

I hardly ever recommend 15 year fixed mortgages to my clients…unless they’re doctors or someone who makes so much money that their mortgage deduction is reduced and they all ready have all the investments they need. 

Even if Christy and Tom’s case where they want to ”look around and buy the home where, if we’re lucky, we’ll grow old together”.    Why pay off your mortgage and lose one of your best income tax deductions?

Christy, Seattle is not too pricey for normal people…your 15 year fixed mortgage is.

Recommended was a 40 year mortgage! And the word was, "You can buy more home." I wrote a comment that went along the following.

I can’t believe that a mortgage planner would be writing what they are. The strategy that you are talking about is futile.

Let’s say today I plan to buy a house with a 30 year mortgage. Great I can. But the rub is that if I can buy a house with a 30 year mortgage so can others. Then prices increase and people start thinking about 40 year mortgages and soon we will be with 100 year mortgages.

The problem, and this is something that Housing Panic blog has stated in the UK is that this is a financial house of cards. People are living beyond their means and it will mean that housing will crash.

And Tood replied the following:

Christian, 30 year mortgages have been the single most popular term of mortgage for many, many decades. Not only did they not cause a housing crash, they created massive wealth and the highest ownership rates in history.

In addition, they are reality. You are correct that they help drive prices up. But to reject them just means you are the one who misses the appreciation train.

There it is folks your reminder! Wall street DID NOT write this comment, Main Street did! And Todd, I am glad I missed this appreciation train!

So when you think about that 700 billion and think it is a wall street problem, think again!