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Stimulus Plan Could Help Homeowners And Buyers

The 2009 American Recovery and Reinvestment Act will include a refundable first-time homebuyer tax credit of up to $8,000. That is one of four housing incentives included in the plan.
The credit is designed to increase home sales and some feel that this will result in an additional 300,000 home sales in 2009.
Rules for 2009 first-time homebuyers tax credit...

  • Does not have to be repaid unless the home is sold within three years.
  • Applies only to first-time homebuyers, defined as those who have not owned a home within the previous three tax years.
  • Available only for homes purchased between Jan. 1, 2009, and Dec. 1, 2009.
  • Restricted by income; phases out for individuals with an adjusted gross income of $75,000 or above and for married couples with a combined adjusted gross income of $150,000 or above.
  • Tax credit is for up to 10 percent of the purchase price, up to a maximum of $8,000. For example, a buyer of a $150,000 home could receive a tax credit of a maximum of $8,000, while a first-time buyer of a $70,000 home would be eligible for a tax credit of $7,000.
  • The credit can be taken on 2008 taxes even when the purchase is made in 2009.
  • In addition to the first-time homebuyer tax credit, there are three more changes that could have a positive impact as well.....

1. The tax credit for making energy efficient home improvements has been increased to 30 percent of the cost of the improvements. There is a cap of $1,500.  Some of these improvements include adding insulatoin, replacing doors and windows, and installing new hot water heaters and heating and cooling systems.

2.  Loan limits for the FHA reverse mortgages have been increased to $625,500. The previous limit was $417,000 so this change is significant especially for those who live in areas where home values are extremely high.

The program, which took effect Jan. 1, allows older homeowners to use the proceeds from a reverse mortgage to purchase a new principal residence. To qualify for a new purchase reverse mortgage, buyers need to be seniors over age 62 and presently own a home. Read more about reverse mortgages HERE.

3. Higher FHA and conforming loan limits. The maximum FHA loan limit for high-cost areas has been raised to $729,750 from a recently lowered limit of $625,000. The stimulus package restores the 2008 limits through the rest of 2009. This will help keep a greater percentage of loans in the "conforming loan" category. Conforming loans have lower rates makes it easier for borrowers to qualify for mortgages. This can help in areas where real estate values are extremely high.

Obama's Stimulus Package


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