Health of the Economy

 By Mattie Warbelton

 

As the health of the United States economy declines, different ages of individuals find themselves stuck in very different places facing a diverse set of issues. One of the 

biggest issues that effects everyone within society is the real-estate market- simply because everyone needs a house. Whether you admit it or not, the changes within this 

market can cause changes in every aspect of life. An article in the Chicago Tribune states that " In the 50-plus population, 16 percent of home loans are underwater, or lack the equity necessary for refinance." In the older population, it has became harder and harder for them to make mortgage payments on the houses- a big issue in the US economy right now. Because of this, the older population is left with no other choice but to attempt to refinance their home. If successful at refinancing their home, the owners would receive a lower interest rate per month, giving them money to spend on other things. Within the 50-plus population, the article stated that many of these individuals would put the money into their retirement funds- something very important at their age. So what happens if that refinance isn't possible? 

Because of refinancing, there is also the possible chance to tap into homes equity. The equity is the increased market value of their homes, versus what the actual homes value was when it was bought. This adds an additional flow of money, which could possibly help the older population make payments into retirement funds or to pay for any credit card debt they may have accumulated throughout the years. If this refinance isn't possible, mortgage payments go unpaid, and more and more houses are foreclosed per month. 

This issue has also brought out many underlying problems. In an interview with Guy Cecala- publisher of Inside Mortgage Finance- about this issue, he stated "We don't have 

any proactive program to help people before they get into trouble." It is without these programs, that the US Economy sees more and more home being foreclosed per 

month. In august 60,600 homes entered into the foreclosure process. The problem was also brought to light about the savings decisions of the older population. Perhaps if 

they might have saved more in their past- they would have enough savings to refinance, or they wouldn't even be presented with the issue in the first place. If only someone reached them sooner.

So far, the only program put into effect to help there people is the HARP mortgage, or the Home Affordable Refinance Program. This is a federal debt relief program that allows homeowners who don't have enough equity to qualify for a basic refinancing in order to get a lower interest rate of mortgage. In order to be eligible for this program, applicants have to be up to date on their mortgage for 12 months- something that has ruined the chances of most receiving aid. This all directly circles back into the fact that the overall status of the economy is declining. No matter what problems the economy is facing- there are issues in it's past that arise. It makes you question the choices we are making now- hopefully we will all be able to avoid potential problems like this in the future.