ECONOMICSTIMULUS.US

By Frank Elliot

The economic stimulus bill formally called as HR 5140 was
approved by the senate with an overwhelming vote of 60-38. The
stimulus package amounted to a gargantuan $787 billion, it is an
ambitious package of federal spending and tax cuts designed to
revive the United States economy and save or create millions of
jobs.

There are many hopes riding on the package and it is generally
viewed as the savior of the US economy and the world economy as
well. Last week, President Barack Obama signed it into law in
order to start the economy down the road to economic recovery.

In summary, the stimulus bill will provide one-time rebates to
roughly one hundred and eleven million families, provide tax
breaks to businesses, and ease mortgage loan limits. Now what’s
more important to most of us if you agree is about the
provisions of the stimulus bill and its effects homeowners. The
housing bubble has been considered by many as the root cause of
the economic downturn.

First the bill is aimed to create about 3.5 million jobs,
providing respite to homeowners who have lost their jobs.

Second, the bill can provide homeowners the much needed cash
via tax breaks. Tax breaks can amount to $400 for individuals
and $800 for couples on the first payment alone.

Third, there’s a homebuyer tax credit provision which provides
a $7,500 tax credit to first time homebuyers up to a maximum of
$8,000. The good news is, you don’t have to repay the $8,000.
The credit is available to homeowners with gross income of
$75,000 to $95,000 for individuals and $150,000 to $170,000 for
married couples. The definition of “first time” homebuyer is
someone who hasn’t purchased a house in the last 3 years. As a
form protection, the bill will force a recapture of the entire
$8,000 tax credit if the home is sold within 3 years of
purchase.

And lastly, the bill extends the increase in loan limits that
were passed in 2008. The limits are 125% of the median home
price for the local area for FHA and $417,000 for Fannie and
Freddie. Giving people access to more credit will help people
feel they are in a better financial position and help spark an
increase in home purchases.

The positive effect of the stimulus bill on housing doesn’t end
there. President Obama also hinted of a $50 billion plan to help
stem foreclosures in heavily affected states like Arizona. The
president’s economic team will be providing the public, the
details of the plan to prod the mortgage industry to do more in
modifying the terms of home loans so borrowers have lower
monthly payments.

All these provisions are aimed at alleviating the house
foreclosures which have increase to a record high of 81% from
the year 2007 and might increase further depending on the
effectively of the economic stimulus bill.

Last February 12, the 30-year fixed-rate mortgage averaged 5.16
percent which is 0.56 percentage points off from last year’s.
This has lead to an increase in mortgage refinance applications.
At the same time, it also shows the positive impact of the
stimulus bill.

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