Once the President signs the new housing bailout bill, these are some of the new provisions that will take effect when the bill is implemented on October 1, 2008:
The new housing bailout has many provisions to give some relief to home owners trying to avoid foreclosure. Qualified homeowners may get cheaper, fixed-rate loans and hold off foreclosure - if their lenders agree to take significant losses on their mortgages. It will allow some borrowers to in effect trade in their old mortgages for fixed rate on no more than 90% of the property value (Thanks Federal Government)! The lenders that cannot assist homeowners and take repossess the property will most likely try to unload those obligations onto the Federal Government. However, it still leaves more than 1 million homes that are expected to be repossessed by banks this year.
Before you are able to benefit from this new bill that when signed by the President...and will not be in effect until October 1, 2008. You must first qualify for assistance. Do you qualify for the mortgage bailout?
- You must live in the home that is in foreclosure.
- Your mortgage had to be taken out before January 1, 2008
- Your mortgage payments must exceed your Gross Annual Income GAI by 31%
For first time buyers* that qualify for a $7500 tax credit provided they do not earn more than $75K (150K jointly with spouse) The credit then will be paid back interest free for 15 years. For those that file income tax and only take the standard deductions there will be an additional $500 tax deduction ($1000 joint).
Increased conforming loan limits: Next year, the limit fo conforming loans will be raised to $417,000 or 115% of the local median price, up to $625,500.
Elimination of Down Payment Assistance (Nehemiah) program. So, any buyer doing a FHA loan must have the 3% minimum down payment or have a relative gift them the money.
*Borrowers who use this program will be penalized if they refinance or sell the home in the next five years.
Comments(8)