President Signs $787B Stimulus

President Barack Obama signed the administration's sweeping stimulus package into law on Tuesday. It now carries a $787 billion price tag, and is a mix of government spending and tax cuts. The White House estimates the package will save or create 3.5 million jobs by 2010, and many economists are saying that statistic will be the true measure of the bill's success or failure.
Before penning his name on the bill at the Denver Museum of Nature and Science, President Obama said, ""Today does not mark the end of our economic troubles. But it does mark the beginning of the end -- the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs; to provide relief for families worried they won't be able to pay next month's bills; and to set our economy on a firmer foundation.""
The stimulus plan includes four primary provisions designed to benefit home buyers and homeowners. Gibran Nicholas, chairman of the ""CMPS Institute"":http://www.CMPSInstitute.org, an organization that certifies mortgage bankers and brokers, helped us to break down these housing benefits:
*Expansion of First-time Home Buyer Tax Credit*
The tax credit available to first time home buyers has increased from $7,500 to $8,000 for homes purchased between January 1, 2009, and December 1, 2009. Also, the credit no longer needs to be paid back as long as the buyers live in the home without selling it for at least 3 years. The former version of this credit, which was set to expire on July 1, 2009, required home buyers to pay the funds back over a 15-year time period.
The income limitations remain the same ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as do most other qualification requirements. Also, the credit remains refundable. Nicholas explained, ""this means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns, and the IRS will write them a check for the difference between $8,000 and their actual tax bill.""
In fact, Nicholas pointed out that the credit can be claimed on 2008 tax returns, filed by April 15th of this year, even if the home is bought in 2009. There is one catch, however, Nicholas said - if the home was bought in 2008, the credit remains $7,500, and it still needs to be paid back over a 15-year timeframe, beginning in 2011, with the filing of 2010 returns.
*Higher Reverse Mortgage Loan Limits*
The loan limits for reverse mortgages insured by the Federal Housing Administration (FHA) have increased to $625,500 across the entire country - not just in higher-cost areas. The previous limit was $417,000. According to Nicholas, ""This is especially important because the FHA program is virtually the only game in town, as private and jumbo reverse mortgage programs have nearly all evaporated.""
Nicholas said this aspect coincides with another little-known change in the reverse mortgage arena: the availability of reverse mortgages on home purchase transactions. ""This is a fantastic opportunity for senior citizens to buy a new home and live mortgage payment-free without having to wait for their old home to sell,"" Nicholas said. ""Seniors could also use this strategy to buy a new home and turn the old home into a rental or otherwise wait for market conditions to improve before trying to sell the old home.""
*FHA and Conforming Loan Limits Restored in High Cost Areas*
The maximum limit for FHA and conforming loans throughout most of 2008 was $729,750, but that amount was reduced to $625,500 in 2009. The economic stimulus package restores the $729,750 maximum. According to Nicholas, ""This makes higher cost homes more affordable - especially in the coastal housing markets that tend to have higher than average home values.""
*Expansion of Home Improvement Tax Credit*
Under the new stimulus plan, the tax credit for making energy efficient home improvements is now 30 percent of the cost of the improvements, up to a maximum of $1500. Nicholas explained, ""This means that if the improvements cost you $4,500, you would receive a tax refund of $1,500 when you file your tax returns.""
Eligible improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners, and water heaters.