Portland Mortgage Broker

So the bill was passed by the House and the Senate, and signed into law by President Bush. A 786 pages long, let’s pull out the parts that really mean the most to us.

First, the tax credit to first-time home buyers (note that first-time home buyers are those who have not had an ownership interest in a property in the last 3 years). The Government is offering a $7,500 tax credit in the year that the house is purchased. This is a healthy chunk of money, but it comes with a few catches. The entire $7,500 must be repaid over the following 15 years, in $500 installments. So, it’s more like a tax-free loan than it is a true credit. The credit is available to anybody who purchases a home between April 9, 2008, and June 30, 2009.

Next, let’s consider the increase of so-called “conforming” loan limits to $625k (From $417k now). This is significant because clients in the market for non-conforming loans are currently paying 1-1.5% higher than clients who are securing loans under the current Fannie Mae/Freddie Mac conforming loan limit. Prior to a year ago with the onset of the credit crisis, the figure was more like .5%.

One more significant point that I personally take exception to is the abolishment of down payment assistance programs. Presently, it’s possible for a buyer to still obtain 100% financing through the use of a seller-funded down payment assistance program. The seller contributes 3% of the purchase price to a DAP, which then disburses the funds to the buyer at closing as his or her required down payment. It’s the last 100% financing option available to Americans today, and it sounds like the sun is going to set on October 1. It’s also important to note that HUD already tried once this year to abolish DAPs, but a judge overrulled HUD literally the day before it was set to take effect.

There’s a lot more to talk about with this Act, but for now I’ll extrapolate these three as having the greatest impact to those of us seeking to secure a mortgage. Please feel free to reply or give me a call with any specific questions about what the Act means to your specific scenario.