When I posted about passage of Obama's stimulus plan, I got a few comments from readers who were pretty much indifferent. A lot of government spending, a $400 tax break: the tone was that while it might help the broader economy, there's nothing in it for me personally.
So I'm wondering if your attitudes are the same after hearing about the $75 billion housing rescue plan that Obama announced yesterday. If you haven't heard the details by now (and if you haven't you died yesterday and woke back up this morning), Obama wants to help as many as 9 million homeowners by allowing those struggling with houses that are underwater refinance their loans. In English, that means if your house is worth less than you owe because of the drop in the housing market, you be able to get a new, lower-interest loan that reflects the actual value of the property.
You won't have to already be late on your mortgage to qualify, but your payment does need to be more than 31 percent of your income. (That's important because under old, sensible lending rules, banks never would have let you take a mortgage where the payment was more than a third of your income anyway.) One big question I have is whether that 31 percent limit will apply to your gross income or your take-home pay? That could make a big difference for many.
In any event, this seems like a stimulus plan that will help a lot more people directly, though it's unclear whether $75 billion is enough to help 9 million homeowners.
10 comments:
I asked you the question and then I gave it some further thought. My best educated guess is that if your qualification for a mortgage is based on your gross, the qualification for help will also be based on your gross
I think the new housing bill is on the money from what I have learned thus far. Personally, I am licking my chops to see if any part of that refinance program could result in lower mortgage payments for me. What better way to stimulate the economy then to increase the disposable income of a recovered shopaholic? :-)
Recovered, or soon to be in relapse?
Totally recovered, but ready to do some discretionary patriotic spending to help energize the retail industry. :-)
Much like the "jobless" variety during the Bush years, what you're describing doesn't sound like much of a recovery.
In Bee's defense, how will the economy be stimulated w/o ppl spending? And the retail industry is probably suffering the hardest after housing.
If you love your country you will do the noble thing and buy American: J Crew!
Another thing Mr. Reed...
How realistic is to use $400 stimulus to buy a house?
But now $400 can buy boots and a bag? That is a stimulant!
*applause*
To the contrary OGee, a VERY legitimate argument is to be made that the economy is in the position it's in because so many of us spent, spent, spent and when things got bad, there was nothing saved. In Butterrfly's case, that may not be so, but the problem with encouraging people to hit the mall, you don't know who can afford to do so and who can't.
The reality is that any recovery from this crisis is only going to come after significant pain, pain that's unavoidable to all of us, pain that includes getting REAL about money and not blowing it on a blouse or pair of jeans just because you look nice in it. Some retailers will die off (look at Circuit City), as will other companies. Sad, but true, and also necessary.
OGee, you can't be serious. $400 to buy a house? I'm not aware of anyone advocating that the $400 tax credit for individuals would be used for a home purchase, but it certainly would help if you're trying to save a downpayment. $400 by itself won't do much, but $400 on top of the $8,000 tax credit for first time homebuyers, plus lower interest rates on mortgages, plus steals on home prices, and now you're saying something.
That is unless you're short sighted and value $400 boots that will be out of style in a few months, in which case, carry on and have fun.
My initial post was a half joke, but there is some truth to my statement. The $400 would do more to stimulate the retail industry than the housing industry.
BTW: The $8000 first time homebuyer tax credit is a joke. Banks are not lending as freely. Plus the credit does not put you closer to the closing table.
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