Wealth-Building Home Loan

Wealth-Building Home Loan

The revolutionary Wealth-Building Home Loan, developed by AEI’s Edward Pinto and Stephen Oliner, is a new home loan that is less risky than the popular 30-year loan, allows the homeowner to quickly build equity, and encourages buying the right-sized house, all while providing the opportunity to build wealth and save money on loan interest: You own your home free and clear in just 15 years.View Edward Pinto’s presentation on the Wealth-Building Home Loan here.

 

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The authors show that widespread use of Wealth Building Home Loans (WHBL) would have substantial benefits for borrowers, lenders, and the financial system as a whole.

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Recently there has been a flurry of legislative proposals to add yet more housing subsidies to the housing sector, already one of the most heavily subsidized. These are the most recent in a long history of ill-conceived policies that increase housing demand but do nothing about supply.  The result: higher home prices and rents, particularly for low-income and minority households, the very ones these initiatives profess to help.

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The new wealth building home loan (WHBL) provides a much safer and secure path to home ownership and financial security than the slowly amortizing 30-year mortgage.

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Earning a sub-median salary and consequently living in a sub-median apartment isn’t something that makes DC unlivable. It’s almost a definitional matter.

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There is an alternative for the default-prone FHA loans that don’t reliably build wealth. It is the Wealth Building Home Loan.

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The Wealth Building Home Loan offers a much safer path to homeownership and financial security than a 30-year mortgage that pays off very slowly.

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For more than 50 years, U.S. housing policy has relied on looser and looser mortgage lending standards to promote broader homeownership and accomplish wealth accumulation, particularly for low- and middle-income households. This effort has achieved neither goal due to two flaws: First, it fosters unsustainable lending by piling heavy debt burdens onto households with limited financial resources. Second, by relying on 30-year loans with small down payments, homeowners build equity very slowly, giving them little protection against life’s vicissitudes and volatile home pric

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With the latest edition of the National Mortgage Risk Index (NMRI) showing that bad practices are coming back, the Wealth Building Home Loan is a safer alternative to the traditional 30-year mortgage.

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The newly created Wealth Building Home Loan allows you to build equity quicker and pay less interest.

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Housing policy needs to be refocused on strengthening household balance sheets, especially by making borrowers more resilient to home price declines. The new Wealth Building Home Loan developed at the American Enterprise Institute does exactly that.

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