Stimulus Bill To Be Law: First Time Buyers Get $8000 Credit, Conforming Loan Limits Increase

The stimulus bill, having had its original House and Senate versions reconciled in Committee, is now on its way to President Obama's desk in time for his President's Day goal. I'm still wading through the Committee report text, but here is what I can see:

• Credit is $8000 (up from the House version of $7500 but down from the Senate's $15,000)
• Does not have to be repaid as long as you own the house for 36 months from the date of purchase and you purchased in 2009. If you sell before 3 years then you have to repay the entire thing.
  
• Applies to purchases from January 1 through December 1, 2009. (Note: I've seen some other reports saying 12/31, and others saying July or August, but from what I read in the Conference report posted online, it says 12/1) If you bought in 2009 you can elect to treat it as purchased on 12/31/2008 so you can claim it on your 2008 return.
  
• Is a refundable credit - so even if you don't owe $8000 in income taxes then you get the difference back (NB: This is an update from previous post)
• DC buyers cannot claim both this credit and the $5000 DC homebuyer credit.
• Unlike the previous $7500 credit, you can claim the credit even if your mortgage was financed by a mortgage revenue bond (like with VHDA loans) - check with your tax advisor!
• Limitations are similar to the previous $7,500 "credit" (interest free loan) in 2008: income restrictions start at $75,000 (single) and phase out completely at $95,000 or $150,000 (married filing joint) and phase out at $170,000, and have not owned a home in previous 3 years.
  

See page 19 of the Conference Report pdf file here for more.

Here's a handy chart of the old law versus the new law.


Move-up (non first time) buyers -- don't worry, there's something in the Bill for you, too...

There is another important change that hasn't been getting nearly as much press: the temporary reinstatement of the increased conforming loan limits for high cost areas. You may recall that our local Washington, DC, area's conforming loan limits rose from $417,000 to $729,750 last year, giving purchasers of higher end homes an important break on interest rates for loan limits up to that amount. At the end of 2008, the temporary limit expired and it dropped to $625,500. That means any loan above that amount fell into the "jumbo" category--making it very difficult and very expensive for borrowers in that bracket. This stimulus bill reinstates that $729,750, which should make it easier for folks to get these loans which now qualify for Fannie, Freddie (and possibly FHA...unclear at this time) guidelines, which translates to lower rates and greater availability.

Read more about conforming loan limits and how they work here.

Ready to start your search and take advantage of the credit?

Attend a free first time home buyer class.
Contact me to discuss your search.
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$15,000 Home Buyer Credit - What's the Deal?

2/14/09: Credit has been reduced to $8K. See my updated post here.

The big headline is the news of the most recent stimulus package with a special home buying credit. So what's the story? In short, we don't know yet. It's still in Committee because the House version and the Senate version are different (Remember "I'm just a Bill, on Capitol Hill..." if there two versions don't match--and they never do--then it goes to a committee.)

As of right now, according to CNN:

The Senate bill would double the size of an existing temporary home buyer credit to $15,000. It would also allow all home buyers to claim it and remove the requirement under current law that the credit be paid back. The House bill also removes the repayment requirement but leaves the credit maximum at $7,500 and would offer it only to first-time buyers.

If the Senate version wins out - that is HUGE! $15,000 of free money to ANY home buyer with NO income restrictions! The current Senate version has the credit going into effect the day it is signed and lasting for one year. The Senate version is also non-refundable, meaning that if you don't owe at least $15,000 in taxes, you can't take advantage of the full credit (it does, however, let you spread it over two years.) In that way, the Senate version has been criticized as being disproportionately favoring the wealthy.

This WSJ blog has some interesting detail though -- again, this is all preliminary, so don't get too excited--or disappointed--just yet.

Stay tuned!

Update 2/12: Still in committee, but word on the street is that the latest draft contains a provision for First-time home buyers to get a tax credit of up to $8,000. The bill is expected to hit the President's desk by Monday.

Update #2 2/12: Coming out of committee is the compromise of $8000 credit, does not need to be repaid, available through the end of November, and available only to first time buyers (those who have not owned a primary residence in the last 3 years.)

Ready to start your search for a home in the DC or Northern Virginia area? Consider attending one of my free first time home buyer classes - details are here.

Or start searching for homes in the MLS here.

Washington DC Regional Market Updates

Existing home sales across the nation took a surprise jump in December, but most experts say that trend (nationwide) is unlikely to continue given further economic decline. Moody's, however, is optimistic: claiming that 2009 is the "bottom."

Our local economy and flow of investment dollars continues to outperform the nation's averages.

Forbes recently named DC as one of the best places to buy real estate right now, and the Association of Foreign Investors also named DC as #1 on its list of top global cities for investment.

Where there is money and investment, there are jobs, and where there are jobs, there are people that need homes, whether rental or purchase. Here are some of the headlines this month indicating continued investment in our area.

• Hilton Hotels just "checked in" to Fairfax, bringing investment and jobs with it.
• Northern Virginia is prepping to aggressively go after its share of stimulus dollars with its lengthy list of "shovel ready projects"
• The Montgomery County Council moved another step closer to building the Purple line linking Bethesda and New Carrollton

Ready to start your search for a home in the DC or Northern Virginia area? Consider attending one of my free first time home buyer classes - details are here. Or start searching for homes in the MLS here.

Thinking of selling? Contact me to to discuss the impact these developments might have on your home's value!

Home Owners' Hot Topics: Property Taxes, Income Taxes, and Refinancing

Property Taxes: Property tax bills are arriving in mailboxes. If you don't like your assessment, read about the appeal process and deadlines here, and how to build a successful case here.

Income Taxes: At least being a homeowner takes the sting out of income taxes. Remember mortgage interest, property taxes, certain mortgage insurance premiums, and points are deductible. Limits apply so check with your tax preparer.

Refinancing: Rates have ticked up from last month's historical lows, but it's still a good time to explore refinancing. I even refinanced my own house last week! But it can be difficult to see if it's worth it for you, as this article points out. Read more at my blog post "Should I Refinance?" here. And contact me if you need a recommendation on some excellent lenders and settlement companies!

Thinking of selling? This Spring could be a good opportunity - the market is not as bad as you think (see Regional News post). Contact me to discuss listing your home!

Foreclosure Risks

Now that Spring is right around the corner, buyer activity is picking up. There are still plenty of foreclosures on the market, and though there are lots of incentives to buy right now (low interest rates, first time home buyer credits through July 1, and low prices), the risks with buying a foreclosure -- as well as the process itself -- are significantly different.

(Update: The credit above applies to purchases in 2008--when this post was written. If you are purchasing in 2009, see updated info on the new credit here.)

I've provided here links to all my previous Foreclosure (and Short Sale) Related Risk posts here for convenience.

Short Sales vs Foreclosures - What's the Difference?

Short Sales - Are They Worth a Buyer's Time?

Risks of Buying a Foreclosure:

Bank Addendum - Always written in the bank's favor

Timing - Impossible to control turnaround time

Property Condition & Inspections - Unlikely (impossible?) to get repairs made, and careful to retain your 'right to void'

Title Defects - Be sure to have your own title inspection done!

Financing Complications - Timing and property condition issues combine to create complications with financing, too.

If you're considering buying a foreclosure in Northern Virginia, DC, or Maryland, or need help starting your home search, contact me.

Related: Search MLS

First Time Home Buyer? Sign up for my free first time home buyer class in Arlington or DC.