It’s hard to believe that anything that takes nearly 800 pages to describe could be time sensitive, however, President Bush recently signed H.R. 3221, the “Housing and Economic Recovery Act of 2008” and for many, it may provide the incentive needed to act now. A few of the major provisions in the legislation that impact homeowners and homebuyers are listed here:
First-time homebuyers who purchase their primary residence between April 9, 2008 and 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.
Larger Loans at 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, effective January 1, 2009.
FHA Hope for Homeowners
This provision is designed to help homeowners who are "upside down" on their mortgages—that is, they owe more on their house than they can sell it for in today's market. Essentially, this plan allows homeowners who meet the requirements and are upside down to refinance their mortgage to a new 30-year Fixed FHA mortgage. There are a number of qualifying details that must be met and requirements to be agreed to, but if you're upside down on your mortgage and struggling in today's economy, this is an option worth exploring in more detail.
These are just a few of the provisions that may benefit you, and there are a number of other items that impact the housing and mortgage industry as whole. But the bottom line is this, home prices are extremely reasonable right now, home loan rates are low, and new incentives are in place that may help make the decision to purchase or refinance even more appealing than before. If you're in the market for a new home or need to make some changes with your current mortgage, there's never been a better time to act.
Provided by The KEY Team - Preferred Lender:
Toby Wonder, Mortgage Consultant
Homestead Mortgage, Bellevue, WA