4 ways stimulus helps homeowners, buyers |
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The fact that these incentives are "credits" rather than "deductions" makes them even more appealing, Smith says.
"It is well worth taking advantage of a tax credit, as opposed to a deduction, since you get 100 percent back on your taxes from a credit," he says. "In this case, the homeowners will also have the benefit of reduced utility bills in future years."
Dooley agrees the home-improvement tax credit could motivate some homeowners to make energy efficiency improvements. But he also cautions that people who fear unemployment are less likely to take advantage of the incentive.
"The theory is great, but people need to be able to pay for these improvements upfront," says Dooley.
Higher FHA reverse mortgage loan limits.
Loan limits for reverse mortgages insured by the Federal Housing Administration have been increased to $625,500 across the country.
"The loan limits for reverse mortgages have been too low for some time, so this increase could have a big impact," Nicholas says.
The previous limit was $417,000 across the country,
which meant that in markets where homes are more costly --such as
the San Francisco area, New York City and its suburbs, and Washington,
D.C. -- FHA-insured reverse mortgages were not available for many
homes.
Many private reverse-mortgage programs have disappeared, making FHA loans "virtually the only game in town," Nicholas says.
Nicholas says the higher FHA reverse-mortgage limits are especially important in light of the "HECM for Purchase" program passed into law as part of 2008 federal stimulus legislation.
The program, which took effect Jan. 1, allows older homeowners to use the proceeds from a reverse mortgage to purchase a new principal residence. To qualify for a new purchase reverse mortgage, buyers need to be seniors over age 62 and presently own a home.
"Senior citizens who want to move have been stuck in this market, but now they can take a reverse mortgage on a new purchase and pay it off when their existing home sells," Nicholas says. "They don't have to wait until their current home sells to move."
Nicholas thinks the changes to reverse mortgage rules could improve markets in places popular with retirees, such as Florida and Arizona.
Higher FHA and conforming loan limits. The maximum FHA loan limit for high-cost areas has been restored to the 2008 level of $729,750.
Stimulus legislation passed by Congress in the first half of 2008 temporarily raised the FHA loan cap from $362,790 to $729,750 in cities where housing is particularly expensive. However, the higher loan limit expired in January and was replaced by a lower loan limit of $625,000.
The stimulus package restores the 2008 limits through the rest of 2009. This will help keep a greater percentage of loans in expensive cities, such as New York and San Francisco, in the "conforming loan" category.
Conforming loans are eligible for guarantees from mortgage giants Fannie Mae and Freddie Mac. Such guarantees help reduce mortgage rates on conforming loans. The guarantees also make it easier for first-time and low-income borrowers to qualify for mortgage loans.
"This could help places like California see an increase in home sales, but it is not likely to move people off the sidelines if they are still waiting for home prices to drop further," says Nicholas.
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