February 19th, 2009 10:04 AM by Frank Ferrell
The recently signed $787 Billion Stimulus Plan made up of tax cuts, spending programs and homeowner stability initiatives aims reviving the US economy. Homeowners and potential homebuyers stand to gain from key provisions in this stimulus plan, which are highlighted below... --------------------------------------------------------------------------Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the beginning of this year through 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. A tax credit is NOT the same as a tax deduction – a tax credit equals money in your hand, where a tax deduction only reduces your amount of taxable income. The tax credit will benefit single filers with incomes below $75,000 and couples with incomes below $150,000. Buyers will be rquired to repay the tax credit should they sell their homes within three years. -------------------------------------------------------------------------- Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs — Helps 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 — Provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. It is estimated this can help modest-income families save an average of $350/year on heating/air conditioning expenses. Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing — 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 — Provides increasing support for several critical housing programs, including $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
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The Homeowner Stability Initiative
This initiative addresses one of the triggers of the global financial crisis: the 2.3 million U.S. foreclosures last year, which has driven down home prices across the nation.
The plan seeks to provide low-cost refinancing for as many as 5 million Americans, and to help delinquent or at-risk borrowers get their mortgages modified so that no more than 31 percent of their income is tied up in their mortgages. It also provides financial incentives to lenders and even a new insurance program to promote more mortgage modifications. Help available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value — Under the plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan.
Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.
Help available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments — The plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.
This is good news for individual homeowners as well as for the housing industry as a whole, because assisting struggling borrowers before they default should help stop the wave of foreclosures. That, in turn, would help stabilize home prices.