It is an exciting time for the American real estate market in 2021, for both buyers and sellers alike. As we all hope to return to normal in the coming weeks and months with the COVID-19 pandemic fading away as vaccination rates increase, many renters may be looking for a fresh start. With the rise of work-from-home jobs, there is more demand than ever before for homes from first-time buyers. While the steady rise in real estate prices may have some folks worried about making their first home purchase, good news recently came down from Washington.
As part of a larger economic stimulus plan to help the country recover from COVID-19, the Biden administration is also addressing real estate in a variety of ways. Recently a bill known as the “First-Time Homebuyer Act” was introduced into Congress by United States Rep. Earl Blumenauer (D-OR) and Rep. Jimmy Panetta (D-CA) that would help first-time homebuyers in a competitive market. If passed, the legislation would cover homeowners who have not owned or purchased a home in the past three years, offering them a $15,000 credit with some restrictions. The bill includes limits on income and home cost, intended to structure the credit for middle and low income residents.
The legislators authoring this bill have taken specific steps to ensure that the credits would be used to promote buying by specific groups of people. The income limits and home cost constraints include stipulations that buyers must make no more than 160% of the median income in a given area, while home cost must be no more than 110% of the median purchase price. These limits would prevent opportunistic buyers from taking advantage of the credit, ensuring that the stimulus goes to those who need it most in order to boost the real-estate market from the bottom up. There are some caveats to this legislation, such as the fact that buyers would have to occupy their property for at least four years to keep the savings. Also, it will take some time to see if this proposal will be signed into law.
Also joining the federal push to help newer homebuyers are new financing options available through the Federal Housing Finance Agency that should become available this summer. These changes include new mortgage refinancing opportunities for borrowers who are at or below 80% of median area income. These new mortgage products also include credits for reappraisals, and other changes intended to give lower income borrowers more purchase in the market as the economy continues to recover. These changes are part of a larger push by federally-backed mortgage companies, Fannie Mae and Freddie Mac, to support new home purchases in the coming months and years.
Navigating this tax credit and anything mortgage related can be difficult. We’re here to help – contact Mortgage Maestro Group!