Stimulus Changes-- Feb 2009-- Hope for new Home purchases!

House and Senate conferees completed work on final elements of the stimulus legislation early this morning. I want to provide a synopsis to provide an overview of what is in the final legislative package, specifically as it relates to the housing community. I hope this is beneficial information for potential new homeowners, Realtors and other Mortgage Lenders.

House and Senate conferees have agreed upon a compromise stimulus package at a total cost of $789 billion. The House is scheduled to vote on the package today (Friday, Feb 13th)  and the Senate will follow suit shortly thereafter, with expectations that the legislation will reach the President's desk by Monday, Feb. 16. 

There are several provisions in the overall stimulus package that will be beneficial for many of us, and help stimulate demand for housing. 

Chief among these is an $8,000 home buyer tax credit for new home buyers. While we are disappointed and would have preferred a more enhanced tax credit like the Senate version, the conferees did retain some key elements from the Senate and made other modifications that are beneficial to home buyers and home builders. For qualified home purchases in 2009, the legislation: 

•·         Stipulates that the $8,000 tax credit does not have to be repaid, unlike the tax credit passed last summer; currently this is a $7,500 refund for New homeowners and has to be repaid at the rate of $500 per year over 15 years.

•·         Keeps the tax credit refundable, or claimable regardless of tax liability;

•·         Extends the ending date of the home buyer tax credit from July 1, 2009 until Dec. 1, 2009 so that consumers can utilize it during the critical summer and fall buying months;

•·         Allows tax credit home buyers to participate in the mortgage revenue bond program; currently, participants of state bond programs do not qualify for the tax credit; as SD Housing Loans as they are called here in South Dakota

•·         Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds; 

          Income guidelines are $75,000 for a single person, and $150,000 for a married couple.

          The tax credit applies to the homebuyer whom has not owned a property in the last 3 years.

This is only a first step in stimulating the housing economy, and I feel, that along with a little better consumer confidence in the job market, this will be effective in spurring new home purchases in 2009.

It is my hope that we will see more folks taking advantage of this new tax break and step out to purchase homes again!

It would also be my hope that we will see interest rates stay low, at least for the next year to help move this entire stimulus bonus for new homeowners along and make it look even more attractive.