Investeens

On Tuesday, President Barack Obama gave his State of the Union Address to Congress and the nation.  It was an uplifting speech that ultimately reminded the American people why the United States is a great country to live in and provided hope for a brighter future.  It also contained a proposal for mortgage relief from those struggling to make their monthly payments. 

President Obama announced a plan that would allow mortgage owners who are up to date on their payments to refinance quickly and easily. The plan would even allow owners who owe more than their homes are worth to refinance and take advantage of incredibly low interest rates in the housing market today.  Refinancing is simply the replacement of a current loan with a new one by paying a fee, usually with a better interest rate. This results in lower monthly loan payments.

The plan would make the fee to refinance lower so that refinancing would be more affordable for mortgage owners who are up-to-date on their payments.  Of course, a plan like that needs approval by Congress (Democrats and Republicans are having constant arguments over the housing market) and will experience backlash by banks since they clearly will not want to give up higher loan rates for lower ones.

There are, of course, positives and negatives associated with this plan.  The housing market will most likely experience fewer foreclosures since people would be able to more easily meet their monthly mortgage payments.  However, this refinancing plan gives the government a larger role in the housing market, meaning it is more dependent on the government’s direction to keep functioning.  This could potentially cause more gruesome issues down the road.

If Congress passes this proposal, it could be the starting point for a healthy economic recovery or the shovel to dig the housing market into a deeper hole.  It’s time to watch Democrats and Republicans go at it once again!

To read more on this plan, click this link.