THE housing market is still a mess, and continues to serve as a drag on the economy.
Addressing the problem isn’t exactly easy. I personally feel that the housing sectors is dragging the rest of the economy down and here is how I see this.
Before a house gets sold, there are numerous businesses that are affected in a good way. Like the service industry, the inspectors, the appraisers, the termite work, some minor repair work etc.
Once, the deal is struck, the house is actually sold to new buyers. Here are the benefactors: lenders, brokers, banks, insurance companies, remodeling companies, repair companies, roofers, flooring installers and retailers, painters, exterminators, landscaping contractors, furniture retailers, electronics retailers, electricians, etc… I could go on and on, so you get my point, when the housing market comes back, there is also a tier of people that will come back to the work force and start to rent homes, and if more people move into our town, the food and health industry will get their taste of profit and the cycle will go on. We all should help and pray for this.
I read that the government is proposing to help homeowners refinance their homes even if they are underwater. Unlike the initial Obama Refinance program that most likely failed, this is what is circulating around the news world.
In a effort to help resolve the housing crisis, federal officials don’t want to simply force the banks to eat homeowners’ debts because it would undermine the industry. They also don’t want to have the government simply eat the losses, because it’d be a political problem — the feds would be “telling the people who are making their mortgage payments that they’re going to have to pay for the people who aren’t making their mortgage payments.” So far, I don’t like this phrase. We pay for the banks shortcoming!
The Obama administration has a different idea, which has been lingering for a couple of years, but which apparently is starting to gain some traction.
The Obama administration is considering further actions to strengthen the housing market, but the bar is high: plans must help a broad swath of homeowners, stimulate the economy and cost next to nothing.
One proposal would allow millions of homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4 percent, according to two people briefed on the administration’s discussions who asked not to be identified because they were not allowed to talk about the information. Now, let’s see government-backed mortgages, that should be FHA or will that include Fannie Mae and Freddie Mac? Not sure yet?
A wave of refinancing could be a strong stimulus to the economy, because it would lower consumers’ mortgage bills right away and allow them to spend elsewhere.
There are apparently other ideas under consideration, but the refinancing approach, the details of which still need to be worked out, would have the biggest bang for the buck: homeowners, many of whom are currently underwater, would stand to save $85 billion.
They’d still have a mortgage payment to make, but they’d find it easier to afford and would have more money to spend on other things. I don’t like the “under construction” part of this statements. It will take the political muscle man fight a long time to decide which biceps look better on which arm. Meaning getting government intervention will take forever. Hopefully not!
Economist Christopher Mayer from the Columbia Business School explained, “This is the best stimulus out there because it doesn’t increase the deficit, it accomplishes monetary policy, and it reduces defaults in housing.” Agree, will it be implemented is another “BIG” thing.
And what about Congress? That’s probably the best news of all: the administration could act on this without congressional approval.
Refinancing is becoming a trend with mostly homeowners reorganizing debts via refinancing. Of course you have to be able to qualify with these very stringent lending guidelines and of course very tough appraisal values that are being reported. Therefore from what I can see, if you are lucky to have avoided the major Real estate problems with all the diminishing equities, losses of jobs and curtailment of income, you are now even luckier because you actually can save more money by refinancing your current 5% mortgage rates to a possible 4.25% therefore reducing your mortgage payments by another $100-$150 a month. Some people say that these lowering of rates are actually helping people who don’t need it!
I suspect you probably won’t go out and buy another big screen TV or lease another vehicle, I suspect that money will go to your savings account that probably has an average balance of three to four times of your annual salary. Well folks, the gap between the middle class and low to middle and getting bigger and we certainly hope that the blue collar type jobs come back to us thru the Real Estate transactions and lift us all to the next level of income that we needed to survive.
Balances of liquid accounts, like money markets and savings accounts, jumped by $446 billion to $6.3 trillion. More businesses have also been shifting to retail consumer deposit accounts, with consumer balances making up 90.1% of total deposits as of June, Market Insights reported. While retail consumer deposits rose by $382 billion in the first half of the year, business deposit balances slipped $29 billion.
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Please call for your inquiries or concern, thanks for following these article. Please call Ken Go of 1st Innovative Finance Group if you have any comments or inquires, call 562-697-7028 or write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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