Housing bill has Somthing for nearly everyone

Today if all goes well the Senate will vote on the new housing bill and by next week may be law.

If you are ignoring this bill thinking that it is only for a few people in dire need of help think again.

Yes, the bill does focus heavily on homeowners in serious trouble but the bill has many other features as well, here is a brief list of what is in the bill:

RENEGOTIATING MORTGAGES: Creation of a program that may allow some people to replace old loans with new fixed rate loans. The troubled loan must have originated before Jan. 1, 2008 and the loan must be on your primary residence. Income verification will be required. Your loan to income payments must exceed 31% of your monthly income.

Lenders are not required to give you a better deal under the new law even if you do meet the new qualifications unless they feel that you are in fact close to default.

If you do get the new loan you may not do a home equity loan for 5 years and an additional fee will be required and the government will be guaranteeing this loan so they will share in any gain. Sell the home in less than 5 years and the government may get all of the gain.

FIRST TIME BUYERS: If you are buying a home for the first time as your primary residence a buyer may be eligible for a tax credit of $7,500 or 10% of the purchase price, which ever is smaller. As always there are catches and if you make more than $95,000 as a single person you are out of luck and if married you are on your own after $170,000 in income. But for buyers in more modest income ranges this is a nice boost.

In addition the buyer will be paying this credit back over a 15 year period of time so it may be better to think of this as an interest free loan.

Oh, the tax credit is retroactive to April 9, 2008. Any home bought from Jan. 1, 2009- June 30, 2009 can be used on the 2008 tax return. See your accountant for full information.

ADDITIONAL DEDUCTIONS: Your accountant per this bill may give you good news in that you get a federal tax deduction for $500 or $1,000 (if married) from your property taxes. Again see your accountant for the full details.

REVERSE MORTGAGE CHANGES: For older Americans the reverse mortgage has been a boom and to some degrees a disaster. The new bill attempts to address two problem areas. First a limit on origination fees at 2% up to $200,000 and 1% beyond up to a maximum of $6,000. In addition the borrowers cannot be forced to purchase an annuity or other financial insurance.

Last the maximum amount that can be borrowed has been raised and the nationwide cap is now $625,000 up from $400,000.

REDEFINITION OF JUMBO LOANS: This one is a bit hazy but it appears that our friends Freddie and Fannie can now buy loans up to $625,000. There is a 115% rule that will affect the actual amount so depending on where you are the new jumbo rate may be less than $625,000.

VETERANS: Lenders will have to wait 9 months, not 90 days to start foreclosure proceedings on homes owned by veterans.

This is a quick re-cap, things probably will change a bit but as you can see the bill does offer assistance to a much broader spectrum of the population that most people realize and many people here in Reno will benefit from the legislation.

Have a great day!