February 11, 2008
It appears that the Economic Stimulus Package will become law sometime later this month, and I’ve had several questions lately regarding its impact on the mortgage Industry. The Plan is designed to give a shot in the arm to the economy, which continues to suffer partially due to the real estate market, by giving us all some FREE MONEY!! Sounds great, doesn’t it!
The short version of The plan calls for $300 per wage earner in ’07, with an additional $300 per child to go out to tax payers, additional tax incentives for business owners, and an adjustment to Loan Limits on both Conventional and FHA loan limits in SOME parts of the country. Our trusted legislators in Washington are hoping that when we get our $$, we’ll head to the nearest Best Buy/Costco/Macy’s/Car dealership and buy our much needed Flatscreen TV/Bowflex/wardrobe/car to get more money moving in the economy. All of this, or course, to keep us from sliding towards recession/inflation.
So what does this mean to homeowners or prospective buyers here in Oregon?? We’ll get some $$ back, but it likely won’t affect the mortgage industry as many have hoped—at least not here in Oregon. The Secretary of HUD has the final say in regards to FHA loan limits and Conventional Loan limits, but the current text in the bill says that they will only raise loan limits 125% of the median home price, or keep them at the current limit of $417,000, whichever is greater. With the median home price in Central Oregon just a hair above $300K, we will probably NOT see an increase in Conventional loan limits or FHA loan Limits. While there ARE provisions within the text regarding making FHA loans available to borrowers who may be facing Adjustments on ARMS or who are in a class of loans deemed Alt-A or reduced Doc (those loans are no longer available or tougher to get today) and who need to refinance, this is not a huge departure from the way FHA loan guidelines are already written.
The parts of the country that WILL benefit the most are places like southern California, Washington DC, Seattle, Florida, and other high priced home markets where the average home price is much higher. Additionally, the bill is due to “expire” at the end of ’08, meaning that the conventional loan limits may not stay higher in these markets into next year.
This is just a BRIEF snapshot of legislation, so if you have further questions, don’t be afraid to ask.I’ll keep you in the loop as things continue to progress, so have a profitable week and stay in touch!
Carl Salvo
Mid Oregon Lending
497 SW Century Drive · Suite 104
Bend, Oregon · 97702
Ph. 541-728-0390 · Fx. 541-728-0395
Oregon License ML-4707 · NMLS # 277334
