Melbourne Area Blog

There are two government programs aimed at home buyers/owners.

The first is the First Time Home Buyers tax credit. This has gone through several changes this year. As it stands now a first time home buyer (you will qualify for this if you have not owned a home in the past 3 years) can receive a tax credit of $8,000 if you purchase a home between January 1st, 2009 and December 1, 2009 (time is running out!). This credit does not need to be paid back and there are now several lenders who are offering bridge loans for the $8,000 so it can be used as closing or down payment assistance. Income limitations are - adjusted gross income of $75,000 for a single person or $150,000 for married couples. With the changes this year this program has helped in the sale of homes in the lower end of the market.

The Making Homes Affordable program has been disappointing. It has two parts:

Part 1 - Refinancing... this applies if your mortgage is for more than your home is currently worth. In order to qualify for this your mortgage must be underwritten by either Fannie Mae or Freddie Mac. You can refinance up to 105% of your current homes value (soon to be raised to 125%.... isn't this part of what caused the real estate crisis??), and you have 20% in equity you can qualify. If you have an FHA or VA loan it does not qualify.

Part 2 - Loan Modification... this gets me crazy! The idea here was to modify a mortgage with an interest rate of 2% to lower the monthly payments on the front end of the loan. This did little to help those who were falling behind on there payments. I have heard from some that they were offered interest only for a year (again, isn't this part of what caused the real estate crisis?) and the principle not paid would be on the back end of the loan. Also, some were asked to pay closing costs for a loan modification.

My goal was to address this issue a week or so ago. In looking at articles written about these programs I came across an interesting piece written by Joe Nocerno from the New York Times on July 10th. Please take a moment and click on the link to read a very informative article:

http://www.nytimes.com/2009/07/11/business/11nocera.html?_r=1