Categorized | Finance and Mortgage

Increased Mortgage Refinancing Key to Housing Market Recovery

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According to both experts and the United States government, the key to bringing back the United States residential real estate market may very well be increasing access to refinancing. While current mortgage rates are near record-lows, the stringent practices of lenders have made refinancing very difficult for most homeowners.

In order to boost refinancing options for homeowners, the federal government is considering a program that would essentially buy mortgage-backed securities so as to provide hassle-free refinancing of home loans. The idea behind such a plan is that refinancing would lower monthly payments, and in doing so, increase consumer spending on other items.

The proposed program would put sixty to eighty billion dollars back into the pockets of homeowners. The government believes that such a plan will improve the economy through increased consumer spending, and thus, provide a boost in the creation of new jobs.

The federal government has long struggled with trying to figure out how to get both the overall economy, and the residential real estate market back on track. The newly proposed program would work in conjunction with the Home Affordable Refinance Program, making refinancing an option for even those that are considerably underwater with their mortgages.

If passed, the new proposal would not mark the first time that the federal government has purchased mortgage-backed securities. The government had done the same thing from 2009 to 2010. At that point in time, the action had little benefit, though it should be pointed out that mortgage loan rates were significantly higher.

Analysts believe that any plan to buy back mortgage bonds must be accompanied by a vast amount of refinancing in order to succeed. There is hope that such a plan could help provide the housing market with the boost it needs to reach recovery, though the right conditions must be met to make that happen.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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