Mortgage Topics

On July 30, 2008, President Bush signed H.R. 3221, “Housing and Economic Recovery Act of 2008,” into law. This crucial bill contains important provisions and far reaching implications for home owners. For your convenience, we have highlighted the critical factors, in summary format, that will affect current home owners and those that plan to purchase a new home soon.

Conventional Loan Programs

Home Owners AND Home Buyers

- Starting January 1, 2009, the new conforming loan limit in high cost areas will be $625,500 vs. the current limit of $729,750.

Action Step: Refinance or Buy today! Those who have or will need a loan amount > $625,500 after January 1, 2009 could be in for a interest rate shock north of 10%. Jumbo (> $729,750) 30-year fixed loans are at 9% today. Waiting could cost you about $450 per month more per $100,000 of loan amount compared to what you can refinance or buy into today (about 6.5%).

Home Buyers

- First-time home buyers, who have not owned a home within 3 years, can receive a tax credit of the purchase price not to exceed $7,500.

Action Step: Take advantage of the credit for new homes bought between April 9, 2008 and July 1, 2009. If you bought a home after April 9, 2008, make sure you speak with a tax professional to take advantage of the credit.

New Federal Housing Administration (FHA) Programs

Home Owners

- FHA foreclosure rescue: A refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share up to 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.

Action Step: Call a mortgage professional today to find out if you qualify. Be prepared to take advantage of the program when it goes into effect.

Home Buyers

- Minimum down payment increased from 3% to 3.5% after December 31, 2008.

- Down payment assistance programs funded by those who have a financial interest in the sale will be prohibited, e.g., Nehemiah Program via seller credits. However, assistance provided by nonprofits, churches, employers, or family members are allowed. This prohibition goes into effect September 30^th, 2008.

Action Step: If you won’t have a down payment of more than 3.5% after December 31, 2008, then prepare to buy a home before the new change goes into effect.

We know many of you have been taking advantage of our timely updates. We are committed to providing you the most current knowledge and professional service. If you know of someone who can benefit from expert advice and professional help, please point them our way. Additionally, please visit our new and improved website at www.reliancefinancial.com.

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Reliance Financial