MORTGAGES TO 80 YEARS TERM ?

Published in El Nuevo Herald on February 03, 2012

The risk rating agencies Standard & Poor's and Moody's continue to point a steady decline in the value of single family houses. Using the Case-Shiller index are predicting a scandalous fall to 12% for southern Florida in 2012. Although real estate agents say the area has been showing a slight increase due to the presence of international buyers, the truth is we have  to look for a solution to this problem while it encourages the construction sector, which is known as the ultimate creator of employment and thus one of the most dynamic element of economy. In this perspective, the idea of ​​implementing a mortagage inherited program, does not seem outlandish .

In Switzerland there are mortgages financing up to 100 years later. In Spain many mortgages are reaching age 90. In the UK you can transfer the mortgage payment from father to son.

This type of inherited mortgage carries a number of benefits; solve the housing crisis for young couples and recent graduates who often stay at home mother for lack of resources. Would combat the rentier economy by facilitating the acquisition of the property. Would encourage insurance companies that would issue policies in cases of loss of income and / or employment. Broaden the participation of lawyers, who would develop trust documents and contracts to ensure the inheritance of property and debts to the descendants. Require banks and other lending institutions re-launched its portfolio of loans and reactivate its grant of loans to individuals. Reduce legal and ilegal unemployment.

From the bank standpoint the interest rates should be variable. It is illogical to think that a loan can be granted to 80 year term with a fixed rate. The monthly payment for a debt of $ 100,000 at 4% in 30 years is $ 477. In 80 years would be $ 348. It would seem foolish not to pay $ 129 monthly instead of having to pay 50 years more of interest. This is offset by three special payments (balloon payments) at $ 20,000 each, one per generation. Thus, the amount financed to 80 years would now be a monthly payment of about $ 139, regardless of the fluctuation of a variable interest. Who does not acquire a house like this?

Currently, the cost of any rent is $ 1,200 a month. With an income of $ 2.000 the rent represents 60% of revenue, which is certainly indicative of a crisis. This idea of ​​hereditary mortgage is a smart solution. The absence of a down payment would make the adoption of such a program requires a special regulation: is for people who marry for the first and only time. This would prevent unscrupulous traders repeatedly able to divorce.Many may ask, my children will have a debt? Yes, however, is he not born with a debt now and have nothing? Better that at birth, have a guaranteed housing.
BENJAMIN F. DeYURRE

Miami