Everyone is talking about the “American Recovery and Reinvestment Act of 2009,” signed by President Obama. If you are inclined, you can download the 1000 plus page bill at http://www.propublica.org/article/download-the-stimulus-bill-090213 or read their chart version which is plenty hefty itself, but much easier to understand http://www.propublica.org/article/our-tax-cut-chart. Rumor has it that not a single member of congress read the entire Bill so do not feel bad if you fall asleep in the process.

However, since this is a blog devoted to all things related to Real Estate let’s focus on what is in it for you.  First Time Buyers this is big stuff.  Basically, if you are a First-time buyer (defined as someone that has not owned a home in the last 3 years) you will receive an  $8000 maximum credit or 10% of the cost of the home, whichever is less. The bill eliminates the repayment obligation for taxpayers that purchase homes after Jan. 1, 2009, removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before Dec. 1, 2009. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return) and there is a credit recapture if the house is sold within three years of the purchase.

So, if you are purchasing a $170,000 (check this one out www.equitygroup.com/mls=9004035) condominium you just got a refund of 4.7% of the price of your new home when doing your 2009 taxes or an additional $666 in your pocket every month during this calendar year -  while you will not receive the credit until doing your 2009 taxes next year, you can decrease your monthly payroll deductions so you can take advantage of the funds now knowing you will not owe as much in taxes later.  Payments run about $1000-$1200 a month and you will get to also deduct any interest paid on a mortgage loan.

However, here is the cinch; Now is the time to strike while prices are still depressed and before the market and interest rates begin to move up (you know they will).  You have just been handed the perfect incentive – incentive being the key word here – compliments of our elected officials.  Why look a gift horse in the mouth?  This program is designed to help folks buy a home. Really, when was the last time someone offered you thousands of dollars.  No gimmicks, no tricks and no payback. Think about it, do you want to be early in and enjoying your rewards in the place you now call home or part of the mad dash a few months down the road when all the best places are picked over.

There are a few other nuggets that affect housing like the FHA, Fannie Mae and Freddie Mac Loan Limits -The bill reinstates last year’s 2008 loan limits.  The limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of  $729,750 which does not apply to the Portland market.  Generally, not a big deal when prices are dropping, but important to address.

For those of you that love small towns (less then 25,000 residents) there is nothing better then the 102% Loans available from the USDA. You can really buy the home of your dreams with no money down and if you are a first time buyer, get a refund of the Tax Credit noted above. Think Canby, Newberg, Forest Grove and so many more towns that are part of the American dream. The bill provides an additional $500 million to existing USDA Rural Housing programs.  The RHS provides both a guaranteed loan program and a direct housing loan program for those meeting the program’s eligibility criteria. The direct loan program will receive $270 million while $230 million will be allocated for unsubsidized guaranteed loans. It has been reported that this level of funding would provide for an additional 192,000 homeowners across small town America.  If you want to be part of this landscape, then act now before the herd rushes in and uses up all the funds and the great homes get picked over.

I don’t know if we have hit the bottom of this market, nor does anyone else, but I do know that communities are built one happy homeowner at a time.  If you want to have a place to call your own and build long-term wealth, Homeownership is one way to do it.  I cannot think of another investment that you can enjoy so much along the way . . . sit back, fire up the barbecue and pass the beer neighbor.