The Economic Stimulus and Its Effects on the Real Estate Market

With the approval of the economic stimulus bill by the Senate, the package totals are an overwhelming amount over and above $750 billion. This package is a mixture including not only federal spending but also various tax cuts designed to bring some life back to the economy of the United States.

There are many different provisions included in this bill. Many of those provisions would likely still be viable no matter what legislation follows. It’s the responsibility of your realtor or real estate broker to be as informed as possible in regard to any and all effects this stimulus package could have on the real estate market, and therefore your ability to purchase a new home.

This tax credit is expected to encourage more buyers to enter the real estate market, resulting in additional demand for real estate properties. While assuming interest rates remain steady at this present low level, and the usual spring market sales increase, this credit could potentially provide a seller’s market for a short period of time.

Although it seemed that some lenders were hesitant to work with borrowers or homeowners, the new legislation provides for easier negotiation in terms of refinancing or reconfiguring any mortgage already established. Some ways this new legislation can be of help are:

•    When troubled, existing mortgage loans are received by any federal agency holding mortgages from a financial institution. It will now be mandatory for all agencies to work alongside lenders and various other mortgage services to do everything possible to avoid cases of foreclosure.

•    Federal agencies will be required to work alongside other services in order to facilitate any loan modifications which could consider present net value of the mortgage.

•    Refinancing and foreclosure prevention requirements similar to those mentioned above will apply to proprietors of multi-family residences as well. This goal is to provide assurance to which any tenants will not lose their residence in the event the owner of the property develops problems with their mortgage.

•    The ability to make changes to existing mortgages in regards to revisions of principal and period for repayment as well as interest rates.

In addition to these legislative changes, there is now $8,000 credit available for first-time homebuyers. This new tax credit is geared toward home purchases between January 1 and December 1, 2009. The qualifying criteria for this credit are:

•    You purchase (d) a home between January 1, 2009 and December 1, 2009.

•    You live in your new home for at least 3 years.

•    You are a first-time homebuyer, or have not owned a home in the last 3 years.

Although this is not a complete listing of all the items contained in the stimulus, it will give you a general idea of what to expect in terms of the real estate market. In the event you require more detailed information in regard to how this stimulus could be beneficial to you, contact your realtor or real estate broker to receive up-to-date information.

Nicole Mickle is the owner of APAT Settlement Services, a nationwide mobile mortgage closing company. You can find out more about Nicole at http://www.apatsettlementservices.com. You can also read more of her blog posts at http://www.nicolemickle.com.