In The News
President Obama Signs the $787 Billion American Recovery and Reinvestment Act
February 18, 2009 by Mortgage Align · Leave a Comment
We've been writing a lot about the American Recovery and Reinvestment Act and today it's official.
That's right. President Obama signed the Act, commonly known as the Stimulus Bill, into law today and the effects hopefully will be felt soon.
It wasn't an easy ride for the President in his first few months in office. In fact, the legislation was split almost completely down partisan lines. And many experts consider the hard part of all this is yet to come. According to cnn.com there is nothing easy or simple about the Stimulus plan and implementing it will be challenging:
“Far more difficult will be gauging whether the legislation's trademark initiatives – which include improving physical infrastructure, investing in energy projects and providing financial relief for families by way of tax cuts and increased government benefits — are really doing the trick.
The first step is to stem the recession in the near term. In the longer term it will be to put the economy on a path to sustained growth and greater efficiencies in energy production, health care and other areas.
So how will we know if it's working? What will be the signs? The president and economists say the biggest marker will be an improvement in the jobs picture.
“That's bottom-line number one, because if people are working, then they've got enough confidence to make purchases, to make investments,” Obama said last week before the bill's passage. “Businesses start seeing that consumers are out there with a little more confidence, and they start making investments, which means they start hiring workers. So step number one, job creation.”
The official benchmark estimates from the White House: 3.5 million jobs will be created or saved over the next two years, and over 90% of them will be in the private sector.”
To review, the main parts of the plan that affect homeowners or mortgage customers are:
- An $8,000 tax credit for first-time home buyers that will not have to be paid back. That’s right. It’s non-refundable! This is an big change and improvement over the current $7,500 tax credit approved last year, which had to be paid back gradually over a period of 15 years and was set to expire in July 2009. Here’s how the $8000 tax credit works : First-time home buyers: (defined as anyone who hasn’t owned a home for at least three years) who purchase a home between January 1 and December 1, 2009 will receive a refundable tax credit of up to $8000. The tax credit amount is based on 10% of the purchase price of your home, up to $8,000. In other words, homes valued over $80,000 will only get the max $8,000 tax credit. The credit doesn't have to be repaid, but homeowners much keep their homes for at least 3 years to qualify.
- Limits on reverse mortgage HECM loans will rise to $625,500 until the end of 2009 – at which time the new limit will be reviewed and possibly extended (but it's not guaranteed). The current limit (until tomorrow) is $417,000, so this opens up reverse mortgage options for many seniors.
- Rising conforming loan limits (that sounds like a tongue twister) to $729,750 in high-cost areas for FHA loans. That means that homes in areas with more expensive real estate can continue enjoying the benefits (low mortgage rates with easy qualifying) of FHA loans.
- Financing for states for construction and rehabilitation of low-income housing.
- Funding for rural housing loan programs, with up to 100% financing.
- Grants for energy efficient housing retrofits, and tax credits for energy efficient upgrades expanded through 2010.
That's all there is as of now. The world is watching. Let's hope they enjoy what they see!
