The mortgage industry is hurting, values are down, and relief is coming; but there is a catch. A big catch if no one is reading the fine print.
First-time homeowners.
The Rescue Part…
You will get a tax credit of up to $7,500 – provided you have not owned a home in three years. That is a tax “credit” not to be confused with a tax “deduction.”
The Catch…
That money has to be repaid starting two years after you purchase the home. If you take the full $7,500 tax credit, your tax bill will increase $500 a year for fifteen years. If you sell the home early, you will owe the government the balance.
Forgiveness for refinancing.
The Rescue Part…
In a nutshell if you wish to refinance the lender forgives all debt above 90% of the homes current value. You then get a new mortgage that is insured by the FHA.
The Catch…
First off you will need to pay a FHA insurance premium of approximately $2,700. Secondly, you will have to share your homes appreciation with the FHA. If you sell your home (or payoff the loan) less than a year after refinancing, the FHA gets all of the home appreciation. One to two years? FHA gets 90%. It then decreases at 10% per year but never lower than 50%.
I know this plan seemed great when it was being thrown around in the media and during political campaigns, I just hope people are reading the fine print.
Fine, I suppose this is where you look for some witty insights to my mind. A "bio" of sorts. Here is the deal... I ride motorcycles, smoke cigars, golf, kayak, fly, race my car through the mountains, write (a lot), and travel extensively. I am almost old enough not to care what other people think about me...almost. ~Godfadr
Yeah, I’m pretty much against all these bailout programs. Let them suffer, learn a lesson, and hopefully they are able to move forward.
Funny how this stuff does not show up during their speeches.
Well of course not Melanie….CSpan and political speeches are boring enough without the actual details!!!
As someone once said, “Never let the truth get in the way of a good story.”
The terms of the “bail-out” are even more confusing than the terms of the ARM and exotic loans that got so many people into trouble in the first place. It will be entertaining to see the government actually calculate and enforce the repayment.
The goverment has been throwing away billions and billions at lazy ass welfair recieptants, who will never be productive and their children and their children will fall into the same free money, health care, food, cash and housing trap. At least the home owners that are hurting have jobs and are trying to keep a float even though thay made a bad loan decision they are productive. Lets help em save there homes and let the gready bankers eat some of there profit.
I agree on most of what you had to say. If I may add that the new FHA bill passed by congress and signed by the president should help a lot of distressed homeowners