The American Recovery and Reinvestment Act of 2009 was signed into law on Tuesday by President Obama. The package will give some tax credits, direct aid and discretionary spending projects.
The key highlight for first time homebuyers is the $8000 tax credit. This is increased from the previous $7500 credit and is valid on homes bought after January 1, 2009 and before December 1, 2009. The tax credit will be just that – a credit that you will get back even if you do not owe taxes. The other change is that you can use revenue bond financing and still get the credit – for example you can use a Minnesota Housing Program and still get the credit. The amount of the credit will be the lesser of 10 percent of the cost of the home up to $8000 or $8000 max. You will have to pay back the credit if you sell your home within the first three years.
There are other tax incentives geared towards energy efficient homes and helping with current homeowners to weatherize their homes. They are extending tax credits for purchasing new furnaces, doors and windows.
The other announcement came on Wednesday as President Obama announced his $75 billion mortgage relief plan. This will help current homeowners refinance their current loans up to 105% of the current market value with fixed rate loans. The interest rates will be set by the market. The guidelines will be announced on March 1st. The loans have to be held or securitized by Fannie Mae or Freddie Mac. The plan will also offer some help to those that are at risk of foreclosure by providing mortgage lenders with incentives to modify existing first mortgages.
The best news out of this is that if you are a first time home buyer, it is a wonderful time to buy! Now you have homes at very low prices, low interest rates and you can get up to $8000 in a tax credit!
