Economic Stimulus Plan Benefits the Housing

This great article is from Paul Oehm with Banc Group Mortgage Corporation and I thought it was important to get the information out as quickly as possible.

 

Revised February 17, 2009

Just signed and sealed…a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest antirecession effort since World War II. Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today…

 

Tax Credit for Homebuyers

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income. The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

 

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest income families save an average of $350 a year on heating and air conditioning bills.

 

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUDAssisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

 

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

 

More Help for Homeowners in the Future

Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

 

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

 

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

What Happens To Your Credit if You Stop Making Your Mortgage Payment

What Happens To Your Credit if You Stop Making Your Mortgage Payment?Credit Pain

What happens to your credit score if you stop making your monthly mortgage payments? I found out some useful information from Tim Duval, a Mortgage Loan Consultant, with WrStarkey Inc.

Short Sale: A short sale will strongly hurt your credit score. The vast majority of lenders will not approve you for a mortgage for at least 12 months, maybe more, after the short sale. A short sale is, you own your home but have stopped making payments, and have sold the home to a buyer, at a lender approved reduced price, that is lower than what you owe on the property.

Foreclosure: A foreclosure will strongly hurt your credit score. It is very similar to a short sale. The vast majority of lenders will not approve you for a mortgage for at least 12 months, maybe more, after the foreclosure. A foreclosure is, you own your home, have stopped making payments, and the lender has foreclosed on the property and taken possession.

Behind in Payments or Skipped a Payment. Unfortunately, this also can impact your credit scores by reducing your score approximately a hundred points. Right now, lenders like to see a 720 credit score for a home purchase, so a reduction of 100 points to 620, may cause difficulty in purchasing a new home or getting a car loan.

What can you do? There are some great programs offered by Douglas County including a Foreclosure Mediation Program. I would think all the counties would have something similar but Douglas County will sit down, meet with you and offer mediation between you and your lender.