On July 26 the Senate passed the housing bill aimed at reviving the nation’s housing market. President Bush is expected to sign it soon. The two primary objectives of the bill are to ensure the smooth functioning of Fannie Mae and Freddie Mac, and to assist homeowners at risk of foreclosure. Here is a simple breakdown of the elements of the bill that will impact most folks who are not facing foreclosure:
The Fannie Mae, Freddie Mac and FHA conforming loan limit will be permanently increased to 115% of the median area home price from $417,000. More details will be available in the coming days as to how they will define the median area home price, but the
A first-time homebuyer tax credit of $7,500 for anyone closing between April 9, 2008 and July 1, 2009 goes into effect. A first-time homebuyer is defined as anyone who has not owned a home in the past three years. The credit is reduced gradually for single filers with an adjusted gross income over $75,000 and joint filers with adjusted gross income over $150,000. The refund is actually an interest-free loan that must be paid back over 15 years in equal installments. Logistics of this have yet to be worked out.
For 2008, the bill provides an additional $500 single filer deduction for folks who do not itemize their taxes, $1,000 for joint filers.
How much will this really help the housing market? That remains to be seen. The permanent increase in the conforming loan limit is the most useful for our market in the long run.
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