President Obama is confronting the mortgage crisis head-on. His mortgage plan includes two key initiatives, focusing on refinancing and homeowner stability. Let's sum up each and look at how they may affect New York City...
The Refinancing Initiative
This initiative eases back refinancing requirements. For many homeowners, refinancing is now an option. There are credit rating and responsibility requirements, of course. But those who used to be high and dry, such as homeowners with less than 20% equity, can now play a little ball. Also, refinanced loans can't include early payment penalties... another plus.
What does the Refinancing Initiative mean for New York City real estate?
It could mean a whole lot... Considering how low interest rates are right now, this equals an opportunity. Struggling homeowners might earn a little breathing room, giving the market a little more sanity. Investors might be able to move cash around more easily. We'll wait and see, but it could be promising.
The Stability Initiative
This initiative is meant to keep families in houses, before they struggle to make monthly payments. It's a multi-pronged strategy. From asking lenders to lower interest rates so monthly payments are down to about 30% of a homeowner's income... to yearly tax incentives for owners who pay on time... to Treasury-backed principal reductions. Note that these don't apply to investment real estate, just to homes. Still, real estate investors have homes. Right?
What does the Stability Initiative mean for New York City real estate?
Less immediate impact than the Refinancing Initiative. But... even though it took a long time for Manhattan to feel the effects of the credit crunch, anything that's good for the nationwide market will immediately help New York as well. So odds are, when this all blows over, New York will have been affected for the least amount of time. Not fair, is it? That's why this is the best place on earth to own property. No matter what D.C. decides to do, we can choose to respond with confidence.