How is it going to help me? Well that's a great question!!! One of the benefits of the bill is that if you are buying your first home and it will be your primary residence you are eligible to receive a federal tax credit for the amount of $7500.00 or 10% of the purchase price of your house (which ever one is smaller). Say you owe $2000.00 in taxes at the end of the year, if you qualify for the tax credit instead of owing 2000.00 in taxes you would get a refund for $5500.00.
There are some caveats though. If your income is above $75000 for single people the tax credit begins to phase out ( $150000 if you are married). Also you have to pay the credit back over the next 15 years in equal amounts when you pay your taxes, so its pretty much like an interest free loan.
If you are planning on buying or already bought a home between the dates of April 9, 2008 and June 30, 2009 then you can claim this credit on your 2008 tax return
- A new program to help people cancel out their old mortgage loans and replace them with fixed rate 30 year loans. In order to apply you need have originated your loans before or on January 1, 2008. The loan must be for your primary residence and your mortgage payment must have been more than 31% of your monthly household income
- Home owners who take the standard deduction on their tax return and do not itemize will receive an additonal $500 (or $1000 if married) tax deduction
- The bill also addresses the high fees that some older Aemricans are charged when originate reverse mortgages. Under the bill orignation fees can be no higher than 2% if the loan is lower than $200,000 and 1% beyond that up to $6000. Another great thing about the bill is that it states that borrowers cannot be forced to purchase any annuity or other insurance product in order to apply for the reverse mortgage.
- The Bill also gives breaks for veterans. Lenders have to wait nine months instead of 90 days to start foreclosure proceedings for veterans and lenders must also wait at least a year to raise interest rates on mortgages held by someone just returning from military service.
Like I said this bill will help millions of Americans including myself. I that if I get a refund from the tax credit it will be going right to my debt snowball!
Until next time, think prosperous thoughts!