Home Mortgage Proposals
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by: marciafreeman
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The country is two months into 2009 and a few weeks into a new Presidential administration. More Americans are losing their jobs and the economy shows little signs of revival. The economy is front and center on the agenda of lawmakers and aiding the faltering housing market will be part of any proposal to boost the economy. Republicans presented a plan that would reduce home mortgage interest rates. That plan could drop interest rates to 4 percent for a home mortgage. That is a significant drop to the already historically low rates being offered right now. As of the first of February, the interest rate for a 30 year fixed rate home mortgage was 5.1 percent. Those who support the plan believe the lower interest rates will encourage buyers to jump into the market, while freeing up extra monthly savings for them to spend elsewhere. The inventory surplus of homes sitting on the market will slowly be trimmed down, if buyers are enticed to buy because of discounted home mortgage interest rates. According to a major real estate association, half a million sales can be sparked by just a one point home mortgage interest rate decrease. The hope is that by shrinking the inventory, home values will level off.
In addition to reducing home mortgage rates, Congress is debating other means to address the housing sector directly. One proposal is to extend a tax credit to all home buyers, rather than just those buying for their first home. The credit would also be increased from $7,500 to as much as $15,000. There would be an income qualification of $150,000 per year for those filing joint tax returns and $75,000 for an individual. Reducing the amount of home mortgage foreclosures is another topic being addressed. Many banks have voluntarily postponed any home mortgage foreclosures until after the details of any stimulus plan to help the real estate sector are announced.
Consumers, banks and investors are anxiously awaiting the specifics of the stimulus plan. Regardless of the various components being debated, it seems guaranteed that any plan will target the home mortgage foreclosure rates and encourage consumers to buy. In January, the new administration announced that it would like to use half of the remaining TARP funds to help reduce home mortgage foreclosures. In addition, Obama favors a recent proposal introduced by the FDIC that would oblige lenders to decrease home mortgage payments for consumers who are delinquent on payments to 30 percent of their income. Related topics Home loans | Mortgage refinancing |
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