Posted by: Roby Robertson | July 29, 2008

Lake Norman Area First Time Homebuyers, What does the Housing Bill Mean?

Thinking of buying in Lake Norman?

Lake Norman FHA Loans

I will try to explain the housing bill the President is supposed to sign today (7/29/2008).  Some of the bill, to be honest, is way over my head.  However some of the specifics I can explain and help you decide if the time is right.

This information is exerpts from a message sent by Kara Beigay, Communications Manager, Real Estate Services with the National Association of Realtors (NAR).

The Major provisions of the bill are:

  • FHA Modernization
  • FHA Rescue(Foreclosure relief)
  • GSE Reform (Government sponsored Enterprises like Fannie Mae and Freddie Mac)
  • S.A.F.E. Mortgage Licensing Act of 2008
  • Establishment of nationwide mortgage licensing system for loan originators
  • Tax Provisions(Tax credit for First Time Home-buyers is $7500)

According to NAR, here is the latest information on the tax credit for First Time Home Buyers.

To be eligible to qualify as a first time home buyer you can’t have owned a home within the last 3 years.  There are income limits of $75,000 for an individual and $150,000 for families to be eligible for the tax credit.  The tax credit should be able to be claimed on an eligible home-buyer’s 2008 tax return. The credit is available for purchases not only this year, but during the first 6 months of 2009 as well.  There is also speculation that purchases in the first 6 months of 2009 can be used on the 2008 tax returns if purchased before April 15th or in conjunction with an extension or amended return. There is a repayment feature that I do not fully understand that makes the tax credit like an interest free loan! TALK TO YOUR ACCOUNTANT FOR FURTHER EXPLANATIONS. 

Highlights of the FHA Portion of the Bill

  • Minimum Cash Investment is 3.5%
  • Gifts will be permited from family members,unions and state and local bond programs etc.
  • Seller downpayment assistant programs involving the seller or other interested third parties will be terminated 10/1/2008.  Borrowers must be approved before 9/30/2008 to get this assistance

Risk Based pricing Moratorium.   Basically this changes the rules somewhat in how much FHA can charge for the loan.  The moratorium is for 1 year and will be implemented 10/1/2008.  It short, it is about how FHA charges based on the potential risk.

It is thought that any accross the board increase in upfront premium to be less that 2% for two reasons.

  1. Only a small percentage of FHA Loans would have been charged over 2% upfront under FHA’s risk-based premium plan.
  2. The elimination of downpayment assistance loans dramatically reduces FHA’s risk.

Note: This legislation does permit FHA to raise the upfront premiums to 3%

The new loan limit for Fannie Mae and Freddie Maxc will be $625,000 up from $417,000.

As I stated above, this is my best attempt at explaining the portion of the bill that most effects First Time Home Buyers.  I think with the tax credit and elimination of seller assistance, it indeed may be the right time for those on the fence waiting.  However, I expect that in the coming 12 months, the first time home buyer market is going to pick up.

If I can offer an assistance in finding the right Charlotte or Lake Norman home or in putting you in touch with some of my trusted lenders, please contact your Lake Norman Area agent at 704 451 7051.

Need additional Information, read this great article on Voice of America

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