Housing Bill Passed by the Senate, How does this affect Seattle homeowners?

Posted by sonnykwan

July 28, 2008

THE NEW HOUSING BILL

The Housing Bill was passed by the Senate and includes some changes that will impact Seattle real estate. Two of the changes that will impact the Buyer(s) is the increase in down payment requirement for FHA, which will increase from 3% to 3.5% and the depletion of the Down Payment Assistance programs. Both go into effect on October 1, 2008, giving some buyers limited time to find their home and take advantage of the old allowances.

The Housing Bill includes many incentives to overextended borrowers and first time Home Buyers. However, these incentives do not come without stipulations. These incentives include, but are not limited to:
* Renegotiating Mortgages for loans originated before 01/01/2008 and expiring 11/30/2011:
*Must be the Primary Residence
*Maximum LTV is 90%
*Borrower will be unable to take out any home equity for 5 years
*When you sell you will be required to give the Government 50% of any appreciation

* Tax Break for 1st Time HomeBuyers

retroactive back to 04/09/2008 and expiring 07/1/2009 :
*Tax Break is 10% of Purchase Price OR $7,500 (whichever is Less)
* Tax Break is based on your AGI (adjusted Gross Income) and you may not be eligible if your income exceeds $75,000 (single) and $150,000 if you are married, filing jointly
*The Tax Break has to be PAID BACK over the next 15 years, so it is really an interest free loan, versus a true Credit

* Additional Tax Deduction for Homeowner(s)

*For anyone who chooses the Standard Deduction over Itemizing, there will be an additional $500 deduction for single and $1,000 for married, filing jointly.

*Redefinition of Jumbo Loans:

* The redefinition does not apply to us in Thurston County, however, will help provide relief in other areas that are considered to have high housing costs, such as King County.

*Break for Veterans, expiring 12/31/2010:

* Lenders will have to wait 9 months (versus 90 days) to start Foreclosure Proceedings on homes owned by a Veteran who is returning from the Military Service.
* Lenders will have to wait a year before raising interest rates on an ARM mortgage held by someone returning from Military Service.

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