Home Mortgage Proposals

President Obama has not even been on the job for a month yet, and already he has his work cut out for him. 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. A plan introduced by Republicans the first week of February proposes targeting home mortgage rates directly. 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. Proponents of a rate decrease think it will be enough to help hesitant buyers take the plunge into the real estate market. They feel that lower home mortgage rates will help reduce the current glut of unsold homes. According to a major real estate association, half a million sales can be sparked by just a one point home mortgage interest rate decrease. Many believe that the housing sector can begin to recover once people start buying up some of the inventory.
In addition to reducing home mortgage rates, Congress is debating other means to address the housing sector directly. Temporarily expanding the first time home buyer credit to all home buyers is another component being discussed. 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. Slowing the home mortgage default rate is certain to be included in any plan. 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.
The Obama Administration plans to introduce its economic plan in the next couple weeks. It is unclear how many details currently being discussed by lawmakers will be included in the plan, but President Obama has made it clear that he would like to prevent more foreclosures and reduce home mortgage costs for consumers. In January, the new administration announced that it would like to use half of the remaining TARP funds to help reduce home mortgage foreclosures. He also supports giving banks incentives to work with certain qualified consumers who are behind on their home mortgage bills.

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by: marciafreeman
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