Good news this week for home buyers and sellers. On July 30, 2008, the President signed the Housing Economic Recovery Act of 2008 into legislation. The legislation will go a long way in helping to stabilize the housing market and will make the dream of home ownership more attainable for many Americans.
So what does the government intend to accomplish through this new legislation? The Housing Economic Recovery Act of 2008 seeks to:
- Add stability to the market by supporting Fannie Mae and Freddie Mac.
- Help first-time homebuyers with increased loan limits.
- Provides a $7,500 tax credit that is effectively a no-interest loan that is payable over 15 years ($500/year) after the credit is received on the homeowners’ first-year tax return.
The most immediate benefit of this bill is that the temporary increases in conforming and FHA loan limits that were part of the Economic Stimulus Plan, signed earlier this year, were made permanent. For us in the Bay Area –the loan limit piece of the legislation is somewhat bittersweet. The temporary loan limit put in place earlier this year for most of our region was a maximum $729,000, up dramatically from the low $400’s. So while the new $625,500 is permanent, we’ve lost over $100,000 toward purchase price which is greatly needed in our mid-range.
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