Housing and Economic Recovery Act of 2008
As you probably know, Congress just passed new housing legislation designed to help stem the tide during these tough financial times. What does it mean to you, though?
For most home buyers, the three most important aspects of the legislation are the $7500 tax credit for first-time buyers, the elimination of down payment assistance programs (as of October 1, 2008), and the ability to get larger loans at lower rates than previously available. There are some very important provisions for current home owners who are upside down on their mortgages, but I’ll let your mortgage broker or financial planner discuss that with you.
1) $7500 Tax Credit: First-time homebuyers who purchase their primary residence on or after April 9, 2008 and before July 1, 2009 are eligible for up to $7,500 in tax credit, provided they haven’t owned a home in the last three years and fit certain income parameters. The credit is generous, but it is actually an interest free loan, paid back over 15 years at $500 per year when taxes are filed.
2) Down Payment Assistance: Some types of seller-paid down payment assistance programs are being eliminated as of October 1st as well - so purchasing a home before then may gain you a double benefit of tax credits AND seller-paid down payment assistance while it is still available. However, after October 1st 100% financing will essentially cease to exist. So if you are in need of 100% financing, now’s the time to act.
3) Larger Loans/Lower Rates: There have recently been provisions in place that have allowed loans larger than $417,000 to qualify for better financing rates than normally would be available for “jumbo” loan amounts of that size, thanks to Fannie Mae and Freddie Mac. Although these provisions were set to expire, they are being extended…however, the top end of the loan size that will be allowed under these programs will be dropping down from $729,750 to $625,500 as of January 1, 2009.
The actual legislation is well over 100 pages, so I cannot possibly comment on every point. There are a number of other points that directly effect the housing a lending industries.
Bottom line, it is still a buyers’ market with reasonable home prices, low interest rates and new buyer incentives. If you have contemplated buying a home, you owe it to yourself to learn more about the housing bill…and the market itself.
Good luck!
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