Hope for Homeowners Act

By
Mortgage and Lending with Citizens National Bank

As everyone knows, foreclosure rates are up and the percentage of home that are within 2 months of being foreclosed is rising as well.  As a result, the department of HUD has worked rigorously to try to help those families in need.  The simple fact is, it is a very difficult time and a very strategic approach to solving problems needs to be implemented.  That, as we know, takes time. 

One of these approches I learned about a few weeks back is called the Hope for Homeowners Act.  To summarize this act, I can draw two very important conclusions to this act:

First: First time homebuyers, or buyers who have not owned a home in the last 3 years, can take advantage of a tax credit equal to 10% the price of the home or $7500.  To understand this very easily, it can be interpreted as an interest free loan that is paid back over a 15 year period at a rate of $500/year.  Homebuyers who have purchased a home after April 9 of this year can also take advantage of this opportunity.  This can be a very good thing, however, should be used by good money managers.  I recommend to use the money for items that would benefit the home, and increase the value.  If the home is sold, the full amount is owed back.  As you see this can be very beneficial, especially if the home needs some fixing.  Just use caution and your own judgement.

Second: Homeowners have found themselves using a term normally designated for car owners, they are becoming upside down in their equity.  The proposal of this act would help those homeowners that meet certain criteria.  If the lender holding this loan agrees to go forward with this, the home would be appraised and a new loan of up to 90% would be written up and the remaining would be forgiven.  The benefits of this to the lender would be avoiding a costly foreclosure and you can see the benefits to the homeowner.  However, the homeowner would then forfeit their equity on a sliding scale.  For example, if the owner sells the home within the first year, they only get to keep 10% of the equity.  If they sale within the first 2 years, they get to keep 20% of the equity and so forth up to 50%.  This may seem counterproductive in owning a home, however, could be very beneficial to someone upside down on their loan.

I will try to keep updated on these issues and follow up as soon as I hear any more news.

They key to these types of transactions is to talk to a professional.  If you would like to contact me, I would love to talk with you more about this OR anything else on your mind. 

I hope business is well for everyone and that you will have a great night.

Comments (1)

Steve Vennemann-Hennepin-Dakota-Anoka contract for deed property-Ramsey-MN
BoardWalk Premier Realty INC - White Bear Lake, MN

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Aug 29, 2008 01:32 AM