So HR 3221, the Housing & Economic Recovery Act of 2008, was signed by President Bush, and as with many of today's proposed solutions it comes with good and bad news. So, first time home buyers - want the bad news first? The "bad news" is Seller Funded Down Payment Assistance programs that have been allowed on FHA programs will no longer be allowed. The "good news" is eligible first time home buyers, buyers who have not owned a home in the past 3 years, who meet the income criteria of less than $75,000 for an individual or $150,000 for joint filers may take a $7,500 Federal income tax credit if they purchase a home to between April 9, 2008 (yes, that means it's retroactive) and July 1, 2009 that will be their primary residence. Although it is being called a tax credit, it is really more like a zero interest loan, as eligible recipients will have to pay it back in 15 annual chunks beginning 2010-2025 or in a lump sum if the home is sold before the full amount of the credit is paid back.

Area incomes for Southern Oregon may mean many home buyers don't pay $7,500 in annual income tax, so what happens if your Federal Income Tax is less than that amount? You still get to take the full credit! So, let's say you're an eligible first time home buyer and your 2008 Federal Income Tax amount ends up being only $5,000...you'll get a Federal Income Tax Refund for the difference!

Will this mean you would need to forfeit other programs you may be eligible for, like down payment assistance or a below market rate loan programs? It depends on the funding source...you may qualify for both, or you may not. For example, Oregon Bond is a mortgage revenue tax-exempt bond program through the State Housing Finance Agency, and would not be able to use both programs, but if Southern Oregon Housing Resource Center approves limited funding for down payment assistance in Jackson County Oregon, you may be able to use both.

If you want to check on maximum prices allowed, or to see if you may still be eligible for a partial credit if your income exceeds to limits, or additional details see the Summary legislation at http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary3.pdf

With interest rates still low and lots of affordable Rogue Valley homes to choose from, do you have enough reasons to buy yet?

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant - www.Quality4Loans.com