» The 2009 Stimulus Package, Real Estate, and Mortgages

The 2009 Stimulus Package, Real Estate, and Mortgages

The news is full of stories about the stimulus package. The stimulus package is shown in full on the Huffington Post. It’s pretty dry reading and only recommended if you need something to help you sleep at night. If you want a shorter, more concise version, check this summary from CNN. The package is now on its way to the Senate to be dealt with next week. The full package may undergo more changes before it ends up in the Oval office.

Inman News had more information about the stimulus package as it relates to real estate. The stimulus package has a provision to change last year’s first time home buyer’s $7500 credit to a credit which won’t need to be repaid. Last year’s stimulus package required the credit to be repaid over 15 years.

It’s clear incentives are needed to get home buyers off the fence to buy. People are afraid if they buy a home now, it will shortly be worth less. Incentives, along with low interest rates, and great prices can help bring buyers back into the market. Mark Zandi from Moody’s Economy.com. thinks this buyer incentive should apply to all buyers to really have an affect on the number of people buying a home:

“A refundable tax credit for a home purchased in 2009, payable at the time of the purchase, would be an effective way to quickly stimulate home sales and reduce the mountain of unsold homes weighing on house prices and exacerbating foreclosures and the crisis in the financial system.”

Here’s some additional news about the tax credit from a CNNMoney article:

“To be eligible, buyers cannot have owned a home for the past three years, and the new home has to be used as a primary residence. The credit phases out as income rises above $75,000 for singles and $150,000 for couples, and disappears entirely at $95,000 and $170,000, respectively.

Applying for it is easy, or at least as easy as doing your income taxes. Just claim it on your return. That’s it. No other forms or papers have to be filed.

Both the Senate and the House versions of the new act remove the requirement that buyers repay the credit. The Senate bill applies retroactively to any purchase completed between January 1, 2009 and the end of August. The House version is also retroactive to the start of the year, and expires at the end of June. As long as buyers don’t sell for at least 36 months, they keep the money.

And the credit is refundable, meaning that it can be claimed even if the amount of the credit earned exceeds the buyer’s tax liability. So even if your total tax bill comes to just $5,000, you can still qualify for a full $7,500 refund.”

Seniors are also mentioned in the stimulus package with regard to reverse mortgages. Seniors are often overlooked when people talk about the economy. Many seniors have lost so much of their equity and life savings and are no longer in a position to go back to work. Anything that can be done to ease their situation is significant. The stimulus plan is increasing loan limits for reverse mortgages. The FHA HECM (Home Equity Conversion Mortgage) loan is now $625,500 while conventional loan limits are at $417,000.

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For the latest in the stimulus package and the proposed tax credit for home buyers, check out this link.

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