I have been trying to dig up as much information as I could about this bill, and my findings have been surprising.  At first glance I thought the bill appeared to be filled with smoke and mirrors, but the more I dove into it the more I realized that it may affect all of us for the better.

 

There are two main groups this bill targets directly, the first being “1^st time” home buyers.  The bill is allowing for buyers, who have not owned a home in the past three years and who purchase a primary residence between April 9^th 2008 and June 30^th 2009, a tax credit (loan) of up to $7,500. Although this does not help with your down payment at the time of purchase, maybe you can borrow the money from friends or family at the time of purchase as you will be able to guarantee payback at tax time. Don't have a need to borrow the funds?   Then take the money which is an interest free loan paid back over fifteen years and invest it to make some interest for yourself.  I bet this is one of the rare times you will make interest of the government’s money. This is an important part of the bailout, and will spark up some action, but it is far from the catalyst to turn the housing market around.

 

The second group, however, may be the one to light the market up again. The bill includes provisions that encourage banks to take, in essence, a short “re-fi” loan. This means, for those who purchased a home for their primary residence prior to January 1^st 2008 and are currently in distress, there may be an option other than foreclosure.  The option is to get a FHA backed loan for 90% of the properties CURRENT appraised value. This is not the price you paid when you bought the home but its value in today’s market.  This could be a difference of more than 50% of your current mortgage amount in some areas. Now there are some details, this is a government program people, which I am not going to go into, but call me and I will put you in touch with the people who can answer all your questions.  This may save a lot of homes from foreclosure, I have already seen a great decrease in the number of short sales and bank owned listings’ coming on the market since this bill was approved.  

 

Not in danger of losing your home?  This still means good things for you.  Once short sales come back to their minimal numbers again, and bank owned properties, which sell for prices that will make most home owners quiver, are not the price determining comparables your appraiser is using, the inventories will decrease.  When that happens…wait for it… wait for it… HOME PRICES WILL INCREASE!!!!  Wasn’t that worth waiting for? I sure think so. 

 

The moral of the story here is that all signs are leading to a turn-around in our real estate market.  Prices, now, are better than we have seen in a long time, but that is not going to last forever.  In fact, it may just about be over.