Home Prices & Rates are Low. Now's A Great Time To Buy Your Dream Home! Your home likely provides more tax relief than any other acquisition, thanks, in part, to new federal laws designed to ease financial suffering in the recessionary economy. Building on a host of existing tax benefits for homeowners, new breaks help you save money on buying a home, owning a home and selling a home.
Here's the kicker. Designed to provide a financial incentive to get more people to buy homes in the down market, the $7,500 is actually a no-interest loan that must be repaid over 15 years, beginning two years after taking the credit. If the home is sold within 15 years, the balance of the tax credit payback is due, provided there is ample capital gains. The credit payback is forgiven if there's no capital gain at the time of the sale. President Obama recently signed an economic stimulus package that boosted the credit to $8,000 for homes purchased in 2009. The tax credit is a real credit that doesn't have to be paid back.
But to most buyer dismay their job security make them very hesitant to take advantage of the deals that are available.
You probably have plenty of questions about President Obama's $75 billion foreclosure plan. Most homeowners want to know what it means for them, whether they are likely to qualify, and what they need to do to obtain relief.
Although the eligibility requirements and other details are likely to become clearer in the next few weeks, you can glean some information from the Homeowner Affordability and Stability Plan. Due to falling property values, many homeowners cannot refinance into mortgages with lower interest rates.
Nearly six million homeowners are facing foreclosure, primarily due to the current recession.
The foreclosure epidemic is further depressing property values, with each foreclosure reducing nearby property values up to an estimated 9 percent.
The Homeowner Affordability and Stability Plan recognizes that many homeowners cannot take advantage of historically low interest rates, because their loan-to-value (LTV) ratios are too high for them to qualify for a refinance loan. Most lenders want to see an LTV of 80 percent or lower before they will consider approving a refinance loan; that is, homeowners must owe no more than 80 percent of the current value of their property (for example $80,000 or less on a $100,000 home).
Given the fact that property values have dropped as much as 25 percent or more in some areas of the U.S., many homeowners have seen their LTV's rise above the 80 percent cut off. Obama's foreclosure plan is designed to “help as many as 5 million responsible homeowners who took out conforming loans owned or guaranteed by Fannie Mae or Freddie Mac refinance through those two institutions.”
The overall unemployment rate currently stands at a 15-year high according to Bureau of Labor Statistics. Each day since the current recession began, in December 2007, the news has been full of reports of job layoffs. Just today the government released a report indicating that the number of Americans filing for unemployment benefits is at its highest level in a quarter of a century, as more workers seek government assistance. Could the news get any worse?
Unemployment Rate are a visual guide to the Financial Crisis. Plummeting home prices have in recent months eliminated jobs for hundreds of thousands of people, from bankers and real estate agents to construction workers and furniture manufacturers. Tighter lending standards imposed by banks in the wake of huge mortgage losses have made it hard for many Americans to secure credit — the lifeblood of expansion in recent years — crimping the appetite of consumers, whose spending amounts to 70 percent of the economy.
Joblessness has accelerated, and employers have slashed working hours even for those on their payrolls, shrinking the size of paychecks just as workers need them the most.
Among economists, the sense is broadening that the troubles dogging the economy will be stubborn, leaving in place an uncomfortable combination of tight credit and scant job opportunities perhaps well into next year.
Recent indications lend credence to the view that the job market is in the grip of a sustained downturn. Three weeks in a row, new unemployment claims have exceeded 600,000, a level generally associated with recession. Construction spending fell Sharply.
The potential home buyers are not getting back into the cycle for fear of the sagging job market. There are too few to take advantage of the low interest and over supply of available housing.
Until the jobs market pick up where buyers are returning to the work place. There not much of a buyer frenzy to see what homes are available for purchasing.
