All over the news channels are filled with reports President Obama's stimulus plan and focused mostly on the allocated funds in the tune of 75 billion by President Obama's administration for Mortgage Relief. The President's Plan Focuses on keeping up to 10 million people from loosing their homes. Helping homeowners avoid foreclosure is diffidently vital to stabilizing home prices and the economy.The President's plan is very simple, I have plans to give incentives to mortgage lenders who get off their butts and help homeowners facing foreclosure. One of the things they should of done quite some time ago. Several million, I said that is several million homeowners facing foreclosure have become drenched in debt, their debt to income ratio has far exceeded the guidelines (they have more going out then whats coming in) for getting a mortgage in the first place. This can be attributed to greedy lenders or the political correct word, (predatory lending) at Which time the loan was originated, homeowners are losing their jobs Which causing them to have lower incomes, and mortgage payments are typically the bulk of a homeowners debt. President Obama Plan Focuses on cutting mortgage payments to reasonable levels, Which they have said to be 31% of the total homeowners income.The other part of the President's plan would help homeowners have a mortgage Whom owned or guaranteed by the big boys or Fannie Mae Homeowners that Freddie Mac is in trouble with their mortgage, Owing more than their home is worth, can refinance with this new plan or special program. The normal factor for refinancing depends on the your equity or LTV (Loan to Value). Normally the bank or lender is willing to take more of a risk if you have equity in your home. Several years ago homeowners would have fought tooth and nail to keep their mortgage if it had 15-20% equity. But, homeowners that are upside down on their mortgage would do just about anything for some help currently they have no options no where to turn for refinancing into a lower mortgage rate. Their mortgage rates in many cases have adjusted and they are stuck with an inflated mortgage payment and Declining home values. The President's plan is estimated to help up to 10 million homeowners reduce their mortgage payments.By keeping low mortgage rates for homeowners that can refinance and new home buyers, is the key to stimulating the economy and keeping banks from going belly up. Mortgage rates may be reduced another 5 percent to a new historic low of 4% for a 30 year fixed mortgage. I think the overall mortgage relief plan is solid, but it is not very clear how long homeowners will be in this crisis. The government has gave billions of dollars to banks such as Bank of America, but they know little about the damage done to their balance sheets. We and I hope President Obama's plan works Because homeowners need help just like they helped the auto industry and the banks, the people of America needs help also. I'm a homeowner that would love to see my interest rate lowered to 4% for 30 years.Waiting on mortgage relief from the government is not something recommended by most in the financial industry. If you are struggling now paying your mortgage you should seek help immediately.
Tags: finance, interest rates
Gilbert Becker