2009 Housing Stimulus Amendments and What They Mean To You

2009 Housing Stimulus AmendmentsStimulus, stimulus, stimulus.  It seems that Congress is finally going to do something that actually help the American people and economy.  Right now, several stimulus packages are being debated.   Here are the current amendments being considered:

$15,000 Tax Credit

This amendment was offered by Senator Johnny Isakson (R-GA), with Senator Joe Lieberman (I-CT) as a co-sponsor that would extend and expand the home buyer tax credit.
As it currently stands, the Senate has voted and passed an amendment to the economic stimulus package that will give up to $15,000 tax credit towards a new home.
The proposed amendment details are as follows:

  • A tax credit in the amount of $15,000 or 10 percent of the purchase price (whichever is less), with the option to utilize all in one year or spread out over two years
  • The tax credit is available to all purchases of any home from date of enactment for one full year
  • Able to claim the credit against the 2008 tax return
  • Buyers must occupy the homes for two years as their principle residence or face recapture
  • Purchases of homes by investors are ineligible
  • Sunsets the previous $7,500 Housing Tax credit on the date of enactment
  • The tax credit may be used in conjunction with the mortgage revenue bond and mortgage credit certificate programs (unlike the current $7,500 credit)
  • It will cost approximately $20 billion over ten years

Reference Information on the $7500 stimulus package passed in 2008

  • This is credit up to 10% of the purchase price, so there’s no incentive to purchase anything more than a $75,000 home.
    How many homes for less than $75,000 have you seen in your market?
  • It is a tax credit, not a grant so It doesn’t come off the purchase price either. It is strictly a federal income tax credit that isn’t realized until the eligible purchasers file their tax returns.
  • There’s a list of stipulations to even qualify for the credit – including a “modified adjusted gross income” of no more than $75,000 and less than $150,000 for married couples.
  • Ths credit is temporary and has to be repaid. In the initial year, if someone’s tax liability is not at least $7,500, they only get to realize the credit up to that amount. In year two, the new homeowner has a tax liability of $500 to begin repaying the loan and continues for up to 15 years.
  • If you sell the home before the 15 years are up, you will have to repay the balance, if there is any gain over the original purchase price.  The payment on the tax credit is not due until 2010 or when your tax return is filed.  The payment of the tax credit, if you claimed $7,500, would be $500 per year until it is paid.

Amendment #353 … “Fix Housing First Act”

  • Today Senator Ensign (R-NV) will offer amendment #353 … “Fix Housing First Act” … which is broader and include a mortgage rate buy down program which could lower mortgage rates to as low as 4%.   The interest rate buy-down would really help all home owners.

Permanently Increase FHA loan limits

  • Last year,  Congress increased the FHA mortgage limit in high cost areas for a single-family home to $729,750 from the current $362,790.
    In effect, the FHA loan limit was the same as the conventional loan limit – which was raised from $417,000 to $729,750.
  • The purpose of the increase is to lower borrowing costs for home buyers in high cost areas such as California and New York.
    By raising loan limits the definition of a “jumbo” loan has changed. Where before a $500,000 mortgage was an example of “jumbo” financing – and thus priced between .75 percent to almost 1 percent higher than a “conventional” loan – under the new system that same $500,000 mortgage would itself be an example of “conventional” financing and thus not subject to the higher cost of jumbo financing.
  • Lower loan costs, it is hoped, will bring more buyers into the marketplace, increase demand, stop price declines and reduce the current inventory of unsold homes.
  • In 2009, the loan limits reverted back to their original levels.

These links refer back to the sources used in this post:

http://www.housingstimuluspackage.com/

http://www.FixHousingFirst.com/

http://www.ajc.com/metro/content/metro/stories/2009/02/05/isakson_stimulus_homebuyer.html

http://www.realtor.org/government_affairs/gapublic/hr_3221_key_provisions

Click here to email your Senators and Representatives and urge them to support these amendments