Obama's Economic Stimulus - 4.5% Refinancing For Everyone

The US economy, particularly in the third quarter of 2008, has seen a drastic recessionary period. Consumer spending, which accounts for approximately 70% of all economic activity, has decreased sharply, as well as payments on home mortgages and refinancing. Many believe we need an economic stimulus to turn the economy around.

This drop in spending, including mortgages and refinancing, has led to a drop in demand in every sector in the economy, including the housing market. Many experts cite this economic slowdown as the worst the US has seen since the 1930's Great Depression. It comes as no shock that the housing market, and new home construction in particular, is experiencing the biggest decline it has seen in the past 25 years. Without an economic stimulus, many believe it could get worse.

Some, however, are seeing hope on the horizon. Particularly, financial planners and financial advisors are predicting the US economy is on the verge of a recovery. With aggressive and well-thought plans being instituted, the US economy could well see that recovery starting in 2009. Barack Obama's new presidency and economic stimulus plans could well be the catalyst the US economy needs.

Key tenets of Obama's presidential campaign were reducing tax rates and increasing government spending. These two strategies, combined with the US Federal Reserve's rates adjustments, may be the economic stimulus needed to jump-start the US economy.

The decrease in consumer spending which led to the bank's curtailment of credit, and increasingly tougher lending requirements, have in turn led to a higher number of foreclosures, unemployment and an inability for people to make mortgage payments or refinance existing mortgages. It is a vicious cycle and is affecting all sectors and companies in the US housing market. New building construction permits have decreased dramatically and have only added to the problems in the industry.

Due to the scope of these recessionary problems, experts predict the US GDP (Gross Domestic Product) could decrease 8% in this quarter. President Obama, however, may have the answer. Obama has delivered a dramatic, yet thorough, well-crafted refinancing plan, that if carried out appropriately could be the economic stimulus the housing markets and in turn the US economy needs.

Obama's economic stimulus strategy for the housing market is pretty straight-forward. He believes every American should be able to obtain a 30 year fixed mortgage at a 4.5% fixed interest rate. This would extend to existing homeowners and allow them to refinance their current mortgage to the 4.5% fixed rate. The current national interest rate average is 5.47%, so this is approximately 1 full point less.

The basic premise of this economic stimulus plan is that by reducing the interest rate, the cost of a new home or a an existing mortgage that is refinanced, also is reduced. Homeowners would end up with more money in their pocket every month. This additional money could now be used for buying items in other sectors, in turn increasing demand across all segments of the US economy. In addition, home ownership would also increase, stemming the tide of foreclosures and stabilizing property values and the housing market as a whole. This could even lead to an increase in property values. Financial planners and financial advisors believe this is a viable solution.

Obama's team believes this component of the economic stimulus will lead to a long-term solution to the problems the US housing market now faces. The estimated price tag of this reduced interest-rate plan is around $3 trillion. And while this could be the basis for the turnaround of the US economy, how this plan is implemented is equally important to it's success. One concern is that if both new mortgages and existing homeowners who refinance have access to the 4.5% interest rate, the costs of the stimulus would be too great. So, for now, the government proposes only new homeowners have access to this plan.

The greater concern is that a person may obtain a new mortgage at 4.5% and simply buy a home from a person they already know, eliminating a mortgage or refinancing. This would not add to home ownership and would consequently make this economic stimulus plan ineffective.

As a whole, however, President Obama's 4.5% interest rate plan for new mortgages and refinancing may be the economic stimulus the US economy needs to stabilize the housing market, and the economy as a whole.

Apply Now.

To prepare the important documents you require to apply for Obama's Loan Modification Program you can order and download Foreclosure Prevention Guide which provides you with...

- All the forms required

- Document templates

- An extensive how-to guide

- And much more

To learn more about the loan modification process please visit: http://www.foreclosuresmedic.com

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