New Entries
Newly Signed Relief Plan to Benefit First-time Home-buyers and Distressed Homeowners
The most exciting piece of legislation in the soon-to-be enacted housing relief bill is the tax benefit for first-time home-buyers. First-time home-buyers will be eligible for a tax credit of up to $7500 towards their federal income taxes provided they meet the income requirements. The tax credit isn’t a complete giveaway; buyers will have to repay the $7500 over 15 years, but the loan comes interest-free. Not a bad deal! The income limitations are $75,000 for a single person, $150,000 for a couple filing jointly.
This could provide a boost especially to first-time buyers in higher-priced markets like California where for years they felt priced out of the market.
Another component of the relief bill will be to enable distressed homeowners who are underwater on their mortgages to refinance into lower risk federally insured FHA loans. Legislators say this could benefit up to 400,000 homeowners, but in practice there’s no way to know how many will benefit.
The bill would require lenders to “write-down� homeowners’ notes so that they can be refinanced into a loan below the market value of the homes. The question remains whether or not lenders will be willing to write down the notes or even be able to. Most loans are securitized on the secondary market, so there are numerous investors that would be affected, and modifying the loans could subject the banks who service the loans to litigation.
July 30th, 2008 at 11:52 am
How much is your home worth? Well, it all depends where you live.
The real estate market is still shaking. New data suggests that home prices have hit a new record low. In every new study that comes out, homeowners from Miami, to Las Vegas, Phoenix and Los Angeles, have seen their home value go lower every time.
Is that disappointing? Of course it is.
Should we sell? Is not a good time.
Should we stick to it? Yes, if you can.
Have we hit bottom? Nobody knows.
Banks are facing their worst foreclosure crisis.
Don’t take me wrong, it’s good if you are in the market to buy a home for yourself or if you are an investor, but if you are not, and you own a home, most likely the value of your property is down at least 15 %.
Why do banks care if you are loosing your home? By having to sell repossessed homes, banks have to literally slash their prices down. It gets very costly for them, after all, they have to pay property taxes, maintenance costs, and whatever utilities that need to be paid, all of this expenses for a house that it’s just sitting there, vacant, and the bank is getting nothing in return.
The latest study by the S&P/Case-Shiller Home Price Index of 20 cities, revealed the news that for 22 consecutive months home prices dropped. Only from April to May, 2009 the decline was of 0.9 %