"700 Billion Dollar Bailout Bill Overview"

In the Virginia Real Estate Industry as well as the national scene, the 700 Billion Dollar Bailout Bill is causing quite a stir for Property Buyers and Property Sellers. The average American has no doubt heard of the bill being talked about, but do they really understand it. Most likely they don't understand it and how it will affect the Real Estate Industry as a whole. So what will the 700 Billion Dollar Bailout Bill do for us and why is it in place at all? The 700 Billion Dollar Bailout Bill is basically a way to make up for terrible practices by the banking industry. For the last several years, bankers have been making bad loans to people with questionable credit. This has caused the Subprime Mortgage Crisis. A story that explains this scenario is this. A family wants to buy a new house and they do some calculating on their own. On their own, they determine that they can afford about a $100,000 house with their current income. They are fine with this and go into the bank to get pre-approved. Once they get there, the loan officer then proceeds to tell them that they can actually have the same payment and get a $200,000 house instead. Through the use of an Adjustable Rate Mortgage, they can have a low initial payment that adjusts with the market rate after a few years. The couple is thrilled with their low payment because they are unable to predict the interest rate 5 years from now. They think that even if the interest rate goes up, they can just refinance their mortgage into something more manageable by that time. At first, everything is going great and the couple is happier than ever. However, after the initial term has ran out, their payment starts to go up. At this same time, the value of their house has gone down significantly over the years. Now they are on the books for a $200,000 loan, but their house is only worth $150,000. This means that they have negative equity and couldn't refinance if they wanted to. Their mortgage payment has now doubled, but their income hasn't. This means that they are forced to foreclose on their house. This practice was done repeatedly over the last few years and now the banks have more foreclosed houses than they can afford to have. Their money is gone and they're sitting here with all of this Real Estate. So now, the government has decided to step in and buy all of this property from the banks. Once the market picks back up, the houses will sell and the government will make their money back. It isn't really the best scenario for anyone, but it is probably the best idea under the circumstances. No one wants the government to bail out bankers that were using bad loaning practices, but it beats the alternative. What this 700 Billion Dollar Bailout Bill will do is keep the credit from drying up. Our economy runs on people being able to buy things with credit. If there were no banks to loan us the money, our economy would be at a standstill. This means that business in the Real Estate Industry will continue to improve. You'll still be able to Buy A House, Refinance or Sell A House easier with the help of the bill. Virginia Real Estate Gurus

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