New Housing Bill has something for everyone in Oshkosh

Congress passed a new housing bill last week. This is a quick breakdown of how you might just get something out of it.

FIRST TIME HOMEBUYERS - You will be eligible for an interest-free loan from the government in the way of a new $7,500 or 10 percent of the purchase price, which ever is smaller. This is a tax credit, which you will subtract from the money you would pay to the IRS. There are income qualifications, at $75,000 or $150,000 for married filing jointly it begins to phase out.

The tax credit must be paid back over the next 15 years in equal amounts on your federal taxes. That is what makes this more like a loan. The credit is also retroactive to homes purchased since April 9th and will continue through June 30, 2009.

MORTGAGE RENEGOTIATIONS - Loans that were originated on or before Jan. 1, 2008 are eligible for renegotiation to a new fixed-rate loan that will last for at least 30 years. The loan can not be for more than 90 percent of what the property is worth today. Your monthly housing payment, including mortgage, interest, taxes and insurance, must be at least 31 percent of your monthly household income.

The catch on this is, lender are not required to give you this new deal, even if you qualify. It is expected to only effect 400,000 households in the country out of the estimated more than 2 million currently facing foreclosure.

There are a couple other doozy of catches on this one.
1. For the next five years you can not take out take out a home equity loan
2. You have to pay a fee of 1.5 percent each year on the remaining balance of your mortgage
3. You must give to the government no less than 50 percent of any appreciation your home has when you sell.
4. If you sell in under five years you will have to give over all of the appreciation gained.

This program begins October 1 and ends September 30, 2111.

ADDITIONAL TAX DEDUCTION - If you own a home and don't currently itemize your deductions, you can now take an additional federal tax deduction of $500 or $1,000 if you are married and filing jointly. This is in addition to the standard deduction.

This will be great for those folks who pay little or no interest on their current mortgage. However, you must report how much property taxes you paid and if it is less than $500, the deduction will be limited only to the actual property taxes paid.

CHANGES IN REVERSE MORTGAGES - Origination fees for new reverse mortgages would be limited to 2 percent of any loan up to $200,000 and 1% for loans more than that. The entire fee is capped on $6,000.

Lenders are forbidden from requiring additional financing or insurance products as a condition of making the loan. Also the maximum amount people can borrow has been raised to $625,600.

WHAT IS A JUMBO LOAN - The definition of a jumbo loan has changed in the higher cost areas of the country. Fannie Mae and Freddie Mac can now purchase loans up to 115 percent of the local median home price.

VETERANS BREATHING ROOM - Foreclosure proceedings will now be held off for nine months instead of 90 days for veterans returning from the military. Also, lenders must wait for one year to raise interest rates on a mortgage held by someone returning from military service.

These are some of the good provisions of the bill which will have an effect on many of us in Oshkosh. There were some not so good provisions as well. Those will wait for another update.