Finally, some sanity in the home finance racket. Location-efficient mortgages take into account the amount of money you don't spend on a car. LEM mortgages are now available in three Apartment Therapy cities: LA, San Francisco, and Chicago, plus Seattle. In Los Angeles, this can make a big difference. "For example, a household making $50,000 a year can qualify for a $140,000 home in a low-density suburb, but a $197,00 home in a transit-accessible, urban-style community."
We especially liked the Transit Myths About Los Angeles County, which points out that cities can and do change... did you know that LA once had 6,000 streetcars?
I don't know about this... sounds like another sub prime scheme to me. It's not like people who live in areas where public transit is readily available think, "Hm, I'm saving x amount each month by not having car. I think I'll continue to not spend that money elsewhere." Instead, these people pick up other expenses because they have the available cash. $3 coffees twice a day... Dinners out most nights... higher rent...
I know this is a blanket statement. But really, people find a way to spend their money.
view hipersons's profile
Hipersons, I think you're missing the point. People might be spending the money elsewhere, but in a financial pinch it's much harder to give up an established commute pattern than a cup of coffee. There's a reason you list car payments on a mortgage application and not lattes.
It's refreshing to see such a responsible idea coming from the mortgage industry. I only wish LEMs were available in more cities.
view lilleprins's profile
I don't think this is a subprime scheme. It's a fixed rate 15-30 year mortgage. Also, it was developed from a three-year long research program led by three non-profit organizations: the Center for Neighborhood Technology, the Natural Resources Defense Council, and the Surface Transportation Policy Project. Other reputable non-profits who are involved include: the Nathan Cummings Foundation, the Joyce Foundation, the John D. and Catherine T. MacArthur Foundation and the Surdna Foundation.
Also, in a city like Chicago (where I live), it is more expensive to live in neighborhoods that have a lot of local businesses, are close to public transportation, and are close to downtown, where a ton of people work. It is good for the city and for the environment to make living in the city affordable for lower income middle class people. (People who,one might argue, may have a greater need to be closer to public transportation.) Otherwise you end up with destitute or super rich neighborhoods with not much in between. A mortgage like this means that someone like me may be able to buy a modest home or condo close to work and won't have to move to the suburbs.
view jackson9377's profile