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Financing Affordable and Sustainable Homeownership with Fixed-COFI Mortgages
The 30-year fixed-rate fully amortizing mortgage (or ?traditional fixed-rate mortgage?) was a substantial innovation when first developed during the Great Depression. However, it has three major flaws. First, because homeowner equity accumulates slowly during the first decade, homeowners are essentially renting their homes from lenders. With this sluggish equity accumulation, many lenders require large down payments. Second, in each monthly mortgage payment, homeowners substantially compensate capital markets investors for the ability to prepay. The homeowners might have better uses for this ...
On the Move: Mortgage Basics
Buying a home is a major financial decision, and for young people in particular the entire process can seem overwhelming. Learn about mortgages and the steps people can take early in life to prepare themselves financially to buy a home, in this February 2022 issue of Page One Economics: Focus on Finance.