Ted Jones, Ph.D..
Staff photo / Harold Bubil
Ted Jones, Ph.D., chief economist for Stewart Title, told an audience at the Sarasota Association of Realtors today that home values are rising, inflation and higher interest rates are coming, and that homeowners should be allowed to refinance mortgages to boost the economy.
Jones said refinancing a mortgage, even if its balance exceeds the worth of the home, would give the average household $300 a month more money to spend, save or invest.
Many owners, he said, would choose to invest that money in home improvements, adding jobs to the economy and raising the value of both the house and the neighborhood.
That would help banks and the government by reducing the number of homeowners who are “under water” and increase property and sales tax revenues.
“It is a natural,” said the straight-talking but entertaining Texan.
“If people have a job and can pay less per month, let them do it,” said Jones. “They have to be current on the loan and all. Get current on your loan and refinance, and let’s let Fannie Mae or Freddie Mac or the FHA insure or buy those loans.
“The U.S. taxpayer is already on the hook for them anyway. If the bank fails and they happen to own that loan, the taxpayer is going to pay for that. We have already guaranteed Fannie’s and Freddie’s (mortgage loans) and already guaranteed all the FHA’s stuff, so why not let them do it.”
Jones described the long-term stimulus of the economy: “It is going to make lenders money, people are going to stay in their same homes, they will start to remodel them because there is a reason to keep it up to date, and they will have more money in their pockets to spend on other stuff,” he said. “It bolsters our entire economy.
“This is a simple thing we can do that really doesn’t cost the taxpayer a dime extra.”
