Understanding the Housing & Economic Recovery Act Of 2008

8/7/2008

Many people have read and heard about the Housing bill signed by President Bush on July 31, 2008. While this bill contains many provisions related to housing issues, there are a few provisions which could greatly benefit potential home buyers in Northwest Ohio.

A critically important provision concerns first time homebuyers, defined as a person or married couple who have not owned a principal place of residence for three years prior to the purchase of a home. That tax credit is 10% of the price of the home up to $7,500. The credit applies to an individual s adjusted gross income of no more then $75,000 or up to $150,000 for those filing jointly.

The credit applies to a purchase on or after April 9, 2008 through July 1, 2009. Every year, for 15 years, 6.67% of the total credit must be repaid. If the home is sold in less then 15 years, the unpaid portion must be paid at that time.

Another provision in the bill is an FHA foreclosure rescue -- a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30 year fixed mortgage at 90% of the appraised value. This program becomes effective on October 1, 2008. Purchasers should talk to a lender offering FHA loans.

Another provision temporarily increases the loan limit on VA mortgages. Housing prices in Northwest Ohio and housing inventory are great right now, making our community a prime area for buyers to take advantage of this new bill. Mortgage interest rates continue to remain historically low, adding to the importance of buying now. While the unfortunate foreclosure situation has seen home prices in some areas decline slightly, investing in real estate is still a good investment. Over years, the value will increase.

Additional information is available a www.toledorealtors.com. Click on federal Housing Tax Credit Information in the middle of the home page.