community mortgages?
Question: Yes, in a way they are taking loans from other people, rather than from the bank. It means the bank gets less interest because all the people involved collectively focus on paying off one person’s mortgage at a time, successively.
Answer: And then the people get less interest, because they are passing up the opportunity to investi their money into long-term investments that are likely to beat the interest rate on the mortgages (never mind the mortgage interest tax credit business).
Paying off a mortgage early is rarely the most sensible investment for the individual investor, unless you have really bad credit and hence high interest mortage (or unless you are living in some 25-year time warp and are paying early-80s interest rates still. Multiplying in times 10 doesn’t make it any smarter!
P.S.: are you researching a US phemenon, or something going on someplace else? Everything I said makes sense in a US credit market, where mortgage interest is low, you get a decent tax break on your interest, and other investment opportunities abound. If you are talking about credit schemes in 3rd world countries, where interest rates are high, investment opportunities are limited, and the whole institutional financial structure is a nightmare for ordinary people, it might make more sense.
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