Stimulus – Not all Bad

In reading and trying to stay updated on what details that have been made available on the Economic Stimulus package that has apparently been negotiated and agreed, it appears that the proposed $15,000 Home Buyer Tax Credit was a casualty.  Sort of. 

The overall cost of this credit would have been $35 billion. In its place, a more modest proposal was negotiated that will increase the credit to $8,000 and will also eliminate the repayment requirement currently in place.  In its current format, the $7,500 credit is in effect an interest-free loan that must be repaid within 15 years or when the home is sold, whichever comes first.  Though there is a minor possibiilty that things could still change, it appears that now the $8,000 credit will be an actual credit, not a loan like before so you’ll not have to repay the credit.  So, not all bad news.

One article stated that the credit would be 10% of the home purchase price or $8,000, whichever is less, but haven’t seen anything more to validate or dispute this.  ( http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/13/BUSH15O70T.DTL )
 
The Stimulus Home Buyer Credit is income qualified and good for First-Time Home Buyers for houses purchased prior to the end of August 2009. 
A first time home buyer is defined as a person who has not owned or lived in a owned primary residence within the past three years.
 
The stimulus agreement would also allow taxpayers to deduct the sales tax paid on new car purchases, though not the interest on the new car loan.

President Obama is expected to sign the bill in Denver on Tuesday, February 17th.
  
 Read the complete stimulus bill here as supplied by consumerism commentary
 
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4 Comments

  1. February 15, 2009 at 8:27 am

    I’d rather see some measure to help buyers get financing. The lack of funding is driving prices down.

  2. February 15, 2009 at 1:13 pm

    I agree that it would have nice to have provisions that dealt more with the housing situation. The lack of funding programs are affecting home prices. Have heard that the President is supposed to have additional housing programs in mind and is scheduled to announce those on Wednesday.

    However a few caveats regarding the self sabotage the lending banks are undertaking.

    I have been hearing stories from mortgage loan originators where a buyer has great credit score, 20% or more down, solid life profile, yet didn’t get approved because they would not have a large enough asset reserve after committing their money to the downpayment.

    Some lenders have raised interest rates higher to cut back on the volumn of loan and refi applications. Seems to me that they could hire more processors and be supportive of their own industry in a timely manner with better customer service.

    The bailout money the banks have received also has generally not been going to finance loan programs, but instead to buy banks with debt, and now those bank buyers are now wanting more bailout money to cover the debt they bought with bailout money. There’s something wrong there.

    The Mortgage Insurers have also raised those costs which have impact on a buyer’s ability to get a loan. Even the FHA loan surcharge, which is an upfront charge of up to 2% of the loan amount, plus the ongoing monthly MI (Mortgage Insurance) fee has an impact on would-be borrowers. It disturbs me that these costs are not being openly disclosed.

    So, while there probably is a need for something more to be done at the governmental level, some of that should be oversight and possible control of what the banks are doing with the bailout money. It’s not getting to the buyers.

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