The top story in the news over the weekend was the rare Saturday session held by the Senate to vote on the "Housing and Economic Recovery Act of 2008".  Most of the talk was about the controversial "bail-out" of Fannie Mae and Freddie Mac, but there's much more to this bill than just making sure that these two large corporations stay fiscally sound.

Yesterday's New York Times had a great graphic outlining the provisions of the bill that was sent to President Bush for his signature. [UPDATE: President Bush signed the bill into law on July 30th]

For First-time Home Buyers, the most important features of the bill are:

1. Increased Conforming Loan Limits - the bill increases the conforming loan limits to 115% of the median home value of an area up to a maximum of $625,000 in high cost areas, such as Fairfield County (the previous limit was $417,000, but is temporarily increased to near $700,000 until the end of this year).  This means that buyers who need mortgage loans of up to $625,000 will be eligible for better rates than previously when they needed to get non-conforming "jumbo" loans.  If you're a first-time home buyers you probably aren't thinking of spending more than $417,000 on your first home, but the owners of the starter house or condo you want to buy might just be motivated to move up to a larger home knowing that than can do it without getting a "jumbo" mortgage.
2. First-time Home Buyer Tax Credit - First-time home buyers who buy their first home from April 9, 2008 to July 1, 2009 will be eligible for a tax credit of up to $7,500.  The credit will need to be repaid over 15 years, but it's effectively a no-interest loan to use towards your home purchase.
3. Additional Property Tax Deduction - Now even taxpayers who don't itemize their income taxes will be able to take a Property Tax Deduction of up to $500 for individuals or $1,000 for families.  Taxpayers who itemize get to deduct more of their Property Taxes.
4. Clearer Mortgage Terms Disclosure & More Oversight of Mortgage Brokers - Some of the reasons that have been given for the current mortgage and foreclosure crisis are that consumers were forced into risky loans that they didn't completely understand by loan officers or mortgage brokers who had little training and experience.  To help alleviate some of those problems in the future, the bill requires that Mortgage contracts have more explanation of the terms of the loan in language that is easier for the consumer to understand.  And there will be new minimum standards set for people wishing to be licensed as mortgage brokers or bank loan officers.  Both of these provisions will give peace-of-mind to home buyers by making sure that the understand their mortgage and that they are receiving advice from an educated mortgage professional.

With additional measures to provide states and local communities with much-needed funding for affordable housing, pre-foreclosure counseling and redevelopment of abandoned & foreclosed properties this bill seems to finally be taking the steps to help get our housing market and overall economy back on track.  Hopefully this bit of good news will encourage the first-time buyers to jump in to the market, which will increase home sales and get the market moving again.  Now we just have to wait for the President to sign it into law and see what happens...

As I mentioned in my first post, my husband and I bought our first home - a condo - six years ago in February 2002.  Here's our story...

Our original plan was to rent an apartment so we could get used to the area.  We didn't even think about buying until the first real estate agent we talked to asked us if we had been qualified for a mortgage.  Boy was she a smart one  - we got on the phone with the mortgage broker she recommended and were qualified for a mortgage right away just in case we saw something we wanted to buy.  Although we were qualified for up to $300,000 we told her we only wanted to spend about $150 - $200K to stay well within our budget.

1. We didn't even attempt to negotiate the builder's price, ask for upgrades or changes to the standard fixtures.  The builder's agent told us the price was what was listed and we believed him (we later learned that other buyers had negotiated lower prices and some upgrades).
2. We didn't do a Home Inspection - it was new, we thought, and the builder has to give us a 1 year warranty, so what could be wrong?  Even though nothing major has gone wrong in 6 years - a home inspection would have found some issues that we didn't find until well after the 1st year and would have taught us some valuable information about home maintenance.
3. We didn't really explore all of our options and we could have gotten more for less.
4. We had no idea how many things could change or go wrong with a new condo association.  Our common charges jumped up by $20/month as soon as the association was formed, we've had numerous increases since then totaling over $80/month along with paying almost an extra year's worth of common charges in special assessments for emergency repairs and budget shortfalls over the 6 years we've lived here.  There's no guarantee that things like that wouldn't have happened in a more established complex, but a long financial history gives more chance for things to remain stable.