It looks like the House and Senate have agreed on a Housing Bill that will do several things to help stabilize the housing market. The President has said he will sign it.
It’s a lot of stuff…so what does it all mean?
First time home buyers can receive a $7,500.00 tax credit when they buy a home. Similar to the tax credit for buying in DC, the home buyer will get the $7,500.00 when they file their Federal Taxes (not at settlement). There are income limits, and the amount will be reduced for higher incomes. Unlike the DC tax credit, it must be repaid. Each year, for 15 years, 6% of the amount owed will be taken out of the buyer's tax returns. This is a big win for FTHBs and should help many get off the fence. This will be effective for homes bought starting April 9, 2008 - July 1, 2009. No word on how this will or wont impact the DC Tax Credit.
The conforming loan limit, which is currently $417,000 will be increased, up to $625,000 in high cost areas. If they use the same median price to calculate this limit as they did for the Temporary Loan Limits, we should see $625,000 in out market. This also applies to FHA!!! This is more good news. Don't confuse this with the temporary loan limit of $729,750 that we currently have for High Balance Conforming and High Balance FHA. The $729,750 is scheduled to expire on December 31, 2008. The $625,000 is permanent. So from now until the end of the year, we have $729,750, after that it drops to an expected $625,000. This may be enough to get certain buyers off that fence.
The Seller Funded Down Payment Assistance programs (Genesis, Ameridream, Nehemiah), that I have been talking about as a way to get to zero down, will be going away effective Sept 30th. They will no longer be allowed with FHA financing (and are not currently allowed with conventional financing).
The minimum amount of money a borrower has to put into an FHA loan will go up from 3% to 3.5%.
Additional safe guards have been put in place to protect Fannie Mae and Freddie Mac, in the very unlikely event they need it. Basically, the US Treasury will give them a big line of credit to borrow from, if they need it. This got a lot of press, and there has been talk about Fannie or Freddie "failing". The general consensus is that Fannie and Freddie are in strong financial shape. These safe guards have been put in place mainly to stop rumor mongering, so that Fannie and Freddie can go about doing their very important business. However, if the sky should fall, the US Govt now has said explicitly that they will back Fannie and Freddie. This is more good news.
A system has been set up to assist homeowner in distress to refinance out of high cost mortgages into more affordable FHA loans. This is good, not just because it helps people keep their homes, but it also helps prevent vacant homes and deterioration of neighborhoods.
There are, of course, many other details to the Bill. I think these are the highlights that affect us most. The up shot is that the Government has come out strongly in support of the housing market.
Information provided by:
J. Ryan Dailey
Loan Officer
Prosperity Mortgage Company
3201 New Mexico Ave. NW
Washington, DC 20016
202.363.1800 x3753 Tel
301.580.8236 Cell
866.359.7966 Fax
Ryan.Dailey@ProsperityMortgage.com
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