New Housing Law Expected to Boost Sales By offering a tax incentive for first-time buyers, higher limits on some types of mortgage loans, and a refinancing program for owners facing foreclosure, a new federal housing law is expected to stimulate the nation’s real estate market.
“The new law will do good things for Florida and across the nation,” says Charles J. Bonfiglio, sales associate with Century 21 AAA Realty Inc. in Cooper City and president of the Florida Association of Realtors®. “It will help people who are in trouble with mortgages and provide assistance for first-time buyers, giving a boost to our industry.”
On July 31, President Bush signed the landmark Housing and Economic Recovery Act of 2008, which features $7,500 tax credit for first-time buyers on the purchase of a home over $75,000 between April 9, 2008 and July 1, 2009. The tax credit would have to be paid back in equal installments over a 15-year period.
Mike Pappas, CEO/president of The Keyes Company in Miami, calls the tax credit a good “espresso shot” for Florida real estate. “It will give our market a kick in the next 12 months,” he says.
The new law also includes a permanent increase in “conforming loan” limits for mortgages guaranteed by Fannie Mae and Freddie Mac from $417,000 to $625,500. Also, the maximum Federal Housing Administration (FHA) loan limit would be raised to $625,500. However, the required downpayment on FHA loans would increase from 3 to 3.5 percent, and seller assistance on those FHA loans would no longer be allowed.
To help owners in financial distress refinance their properties, the FHA will now be able to insure up to $300 billion of those new mortgages.
“With low interest rates, the portability of the homestead exemption, and dramatically reduced prices, this stimulus package will provide a call to action for buyers,” says Pappas. “Overall, conditions are quite positive for a market surge - increasing the rate of transactions in our industry.”
For more information on the Housing Recovery Act, go to www.realtor.org/gapublic.nsf/pages/hr_3221_key_provisions