The short answer is maybe. There is quite a bit to know about the economic stimulus before we can gauge what impact, if any, it will have on the economy. Currently, congress and the white house are still trying to create a deal as to what will be in the economic stimulus plan, but there is some positive news. Basically, Bush and congressional leaders have come up with a plan to try to keep the economy afloat, so that a recession does not occur. There is strong belief in congress that if a law is not passed soon, the United States will have a recession, and some are suggesting that we are currently in a recession.

The definition of a recession is when there have been three consecutive quarters of negative GDP (Gross domestic product) have occurred. For the last 3 quarters we have been having positive GDP, in the third quarter it increased 4.9 percent and in the second quarter 3.8 percent. So a recession, not according to the definition and we are not even close until we begin to start having at least one quarter of negative GDP.

So what does this plan entail? This plan costs the American people $150 billion dollars; it gives individuals a tax rebate equating $600 for an individual and $1200 for married couples making less than $75,000 individual and $150,000 married couple. If you, either single individual or married couple, made at least $3000 in 2007 you will still receive $300 for an individual and $600 for a married couple. By throwing money back into consumer’s pockets the hope is that this will ensure that the GDP continues to keep positive and does not become negative. But there is still a clear problem of energy costs being high, and consumer confidence being very low. As well, this little amount of money will not help the ability of millions of homeowners to purchase.

But, there are some parts of this plan that would help individuals purchase and refinance their properties. Specifically, they are stating that they will increase the GSE for a conforming loan from $417,000 to $625,000 which will allow individuals to refinance at a much lower interest rate. As well, they are speaking about increasing the conforming loan limits for FHA loans from $362,000 to $725,000. By taking these two steps coupled with the reduction of the Federal Reserve interest rate, this will allow individuals that currently have subprime loans to be able to refinance them, in theory. The problem still lies in the ability for these individuals to now get approved for loans under the new guidelines which continue to keep changing. This is especially difficult if the individual has been late, and their credit scores have dropped as a result of late payments. This will make it increasingly more difficult for them to refinance their property before the loan readjusts, if their loan is an ARM.