Reverse Mortgage Information

President Obama had recently signed into law, the Economic Stimulus benefits package. There are some housing elements in this stimulus package. These small steps are not likely to have a huge impact on the US housing market, but these are still beneficial. Americans may want to take advantage of the changes made by the FHA in home based reverse mortgages.

The salient features in this stimulus package plan (2009 American Recovery and Reinvestment Act) that concerns housing are as follows:

First-time buyers of homes can now get the advantage of a homebuyers’ tax credit - $8000 will be available as a tax credit (it does not need to be paid back) for those households with a $150,000 gross income for married couples, and the limit is $75,000 for individuals. The home needs to be purchased in the period from Jan. 1 to Dec. 31, 2009.

The best part of all this is that, the credit in the tax can be availed on the 2008 year taxes even when the home purchase is being made in the year 2009.

FHA (Federal Housing Administration) has raised the loan limits to 2008 levels in those areas of expensive housing, up to a maximum limit of $729,750.

The tax credit for some qualifying energy efficiency related home improvement works has now been raised to 30% of the cost incurred for making such improvements, and the maximum ceiling amount is capped at $1,500.

The FHA has also raised the limits of reverse mortgages to senior home owners who own a property or home. The limit is now $625,500 across the USA.

These new features and benefits have been designed to boost sales in the nation’s housing market. It has been predicted that, home buyers will purchase 300,000 more homes during the year 2009 because of the tax credit feature. It may take buyers at least three to four months to qualify for a mortgage and search for a home, but the results are expected within the end of the year 2009. The new credit feature improves on a first-time homebuyer credit made available in the year 2008. That credit had to be paid back over a period of 15 years, and that was more of a loan than a true credit feature.

This year (2009) the tax credit is expected to generate a bigger impact because it is a true tax credit that is also refundable, as felt by many industry insiders. For example, if you owe $1,000 in the taxes but you qualify for the first-time home buyer tax credit, then you can get a tax refund of $7,000, the difference between the limit of $8,000 and the amount you owe as taxes.

The house buying activity spurred by the new credit availability may help bring down the housing inventory and it will also have the likely side effect of stabilizing house prices.