US Treasury Announces Making Home Affordable Guidelines

Making Home Affordable is a new program designed to offer assistance to as many as 9 million homeowners, making their mortgages more affordable and helping to prevent the impact of foreclosure. There are 2 main parts to the program:

• The Home Affordable Refinance program will be available to 4-5 million homeowners with a solid payment history on an existing Freddie or Fannie owned mortgage. This program ends June 2010.
• The Home Affordable Modification will help up to 3-4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments.

Summary guidelines from the US Dept of the Treasury provide more detailed information.  A new website has been set up http://www.financialstability.gov/ for these programs. If you think you might be eligible to participate there is a step-thru questionnaire at the above link to guide you thru the process. Also you may call your lender to discuss their participation and your eligibility.

Homebuyer Tax Credit Details

The stimulus bill passed by Congress and signed by President Obama offers an incredible opportunity to home buyers. Here are the more of the details:

1. It is a true tax credit. First time buyers who purchase and close on a home between Jan 1, 2009 and Dec 1, 2009 will receive a credit against their 2009 Federal Income Tax of $8,000. (10% of purchase price up to a max of $8000). This is a dollar for dollar reduction in the tax you owe. If your tax bill is less than the credit, you will receive a check for the balance.
2. If the home is sold within the first 3 years after purchase, the entire amount is recaptured on sale.
3. First time buyers are defined as those who have not owned a principal residence in the last 3 years.

Consider this scenario – A first time buyer using FHA financing puts down the required 3.5% on a $200,000 property. The tax credit more than covers the $7,000 down. In addtion, property tax and mortgage interest deductions in the next year would  provide income tax deductions in excess of $10,000! Monthly payments may be even less than rental payments today.

I believe this is an incredible opportunity. If you know of family members or friends who may qualify, contact me and we can explore together.

Stimulus Bill Passes!

Late Friday night Congress passed the $787 billion Stimulus package and sent it to the White House for signature. While all the details are still being sorted out I think we know the plan for Housing. The details on the 2 elements that may garner the most press are quoted from the National Association of Realtors (NAR) (full description here):

1. – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser’s income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser. Here is a Home Buyer Tax Credit Chart that compares the new provisions to that which was on the books.
2. -The bill reinstates last year’s 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans.  These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of  $729,750.  For the few areas where the 2009 limits were higher, the higher limits will apply.  In addition, the bill includes language providing the HUD Secretary with the discretion, if warranted, to increase the loan limit for any “sub-area”, i.e.an area smaller than a county. The Secretary’s discretion is again limited.

These provisions are not as agressive as many hoped for, but they are very good, especially for first time home buyers. An $8,000 tax credit if you are a first time buyer and purchase a home in 2009! If this could apply to you, visit my website and start your free home search or give me a call.