Obama's Stimulus Package for First Time Home Buyers

Since shelter is a basic human necessity it stands to reason that in this unstable economy the government would try to invent ways to make access to housing more affordable. To that end, and in an effort to stimulate the housing market, federal and state governments have presented several programs benefiting people who have either never owned a home or who have not owned a home for three years or more. Individuals in these circumstances may be eligible for one of these government packages.

Home purchases under these programs include pre-existing homes or those that are being built and in either instance will help the economy. In the case of new housing, the builder who may be struggling to make a living, will profit in the sale while providing a new homeowner the experience of ownership. The program incentives fall into three possible benefits:

1. Tax credits
2. Down payment help
3. Lower mortgage interest rates

This home ownership program was developed in 2008 to stimulate home buying and was later expanded to include other provisions in 2009. Since 2008 and before, the real estate market started to collapse due to people being offered loans that they were not qualified to pay back as contracted. It had a snowball affect as people lost jobs due to the faltering economy and in turn began to lose their homes to foreclosure.

The stimulus program allows anyone who purchases a home between January 1, 2009 and December 31, 2009, to be eligible for a 10 percent tax credit based on the gross purchase price with a cap of $8,000. This credit can be taken in the year your home was purchased or within a two-year period after finalizing the sale. A tax credit this large reduces tax liability and creates an opportunity to save money using what is gained from this transaction.

A typical down payment on a house is somewhere in the neighborhood of 10 percent of the purchase price. In the programs offered by the government, you may get assistance in the form of a reduction in the down payment needed to secure the loan. Additionally, the federal government may reduce the points that must be paid on the loan and this, in effect, does lower the interest rate. To qualify for the tax credit, there are income limits. A single person buying a house can not earn more than $75,000. A couple buying a house can not have income exceeding $150,000.

In order to entice people to purchase homes there are some additional benefits associated with the home purchase in the form of tax rebates. These rebates are placed on the interest amount that is assigned to a loan. Rebates are not the same as the tax credits allowed by the federal government. It is also possible to take advantage of this part of the stimulus program if your main interest is that of a landlord with plans to rent the property for increased income. Such ownership reduces the tax obligation of a landlord because maintenance expenses can be charged off at income tax time.

Critical to the health of any economy is expansion and when there is an economic downturn it affects the entire world. We are fast becoming a global economy and one country’s economic health affects another country’s well being too. Economic growth is seen as precarious if the basic infrastructure is neglected. Development of that infrastructure will revive a sagging financial system and that is why the government is doing whatever it can to promote home ownership at a time when we are struggling to stay afloat.

For tips and facts about how you can benefit from Obama's Stimulus Package - or to find out if you qualify, visit our no nonsense home buyer stimulus guide: Mortgage Modification Loan.