Yesterday President Obama announced his housing stimulus plan and we all know the economy in the United States has recently seen a recession. This is the perfect time for the announcement and will save homeowners thousands. The amount of consumer spending, which represents roughly 70% of all economic activity, has dropped very significantly along with homeowners facing all time high foreclosure rates. According to a lot of experts, this economic downturn we are currently in is the worst shape the economy has been in since the great depression of the 1930s. With that said, the home market may have been hardest hit with the largest downturn of home sales over 20 years. However with the recent victory of President Barack Obama, financial planners and advisors have grown a little optimistic. President Obamas campaign was based on large part that taxes would be cut and increasing of government spending to subsidize homeowners who are in over their heads. Currently, this recession has resulted in tightened credit lines, increased foreclosures, and a big gain in unemployment. New home permit applications have plummeted to low record rates, adding problems for the developers. However, President Obamas economic stimulus plan if appropriately applied to the mortgage industry will create a huge economic stimulus for the markets. The plan Obama has is pretty simple. It is based around everyone having access to a 30 year fixed rate mortgage at 4.5%, and homeowners can refinance their home mortgages into this same 4.5% rate. By having a fixed 4.5% interest rate available to current and potential homeowners the housing market could stabilize rather quickly. This plan would allow homeowners to have more money for monthly expenses and the amount of home owners would sharply increase. This could even raise property values as homes are bought up at these low rates. This plans overall goal to stimulate the market by offering crazy low 4.5% interest rates should be a big enough jolt to stimulate spending and get the economy rolling again.

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