As per the Jumbo loans it will be up to the banks and lenders. But I think it will be dictated by the liquidity in the market, confidence in the economy and inflation etc. This is a welcome news to boost the housing market and restore confidence.

Small decrease last week in rates translated to increase in mortgage applications both for refinance and purchase. This decrease will cause even bigger mortgage application surge and will stabilize the market. There are lots of homeowners who’s five years ARM are about to reset this year and this will help them to get about the same rates or slight increase than what they currently have and will not upset their monthly budget.

After your application has been submitted please do not go for a shopping spree thinking the loan has been approved. Like a car loan can dramatically impact your debt-to-income ratio or ability to pay the loan. Moving assets from one bank to another bank can also cause delays. Your loan officer has to prove on your behalf that it was your money and he has to prove it by paper trail. It will add more paperwork and delays.

Buyers ought to follow the advice of their loan officers.

Please take advantage of it while you have some time.

I support this measure so long it is not sponsored by tax payers.

I hope everyone will work together.

Historically the rates are still very low. Since the house prices have gone down in my view there is no better time to buy than now. Follow the principle of buy low sell high. If for some reasons the rates go down in future you can always refinance. But take advantage of lower values. keep in mind if house prices starts climbing again you will never be able to buy at lower price. You might refinance again at lower rate but can not buy at low price the same home. Just my opinion.

Time Magazine ran an article August 21 about the increasing number of college students that are buying houses with friends.  By splitting the costs of owning a house, young people are able to buy houses without having to accumulate the normal level of savings they would otherwise need to have, and are thus able to become homeowners with all of its advantages right out of college.

The article highlights, “This is the story of friends–just friends–who buy houses together because they are young and don’t have a lot of money but smell opportunity in a soft real estate market and want to start building equity ASAP, even if it comes before the wife, kids and golden retriever. “On my own, I might have been able to buy a one-bedroom condo, but that would have been pushing it,” says Kovack. Instead, he and Katz live in a 2,300-sq.-ft. (about 215 sq m) three-bedroom row house with stainless-steel appliances and a deck out back. They split the mortgage, the tax break, the cost of upkeep–and the pride of being homeowners a few years out of college. ”

The article also highlights the importance of having a pre-made agreement as a contigency to solve potential problems.  For example, a pair of Co-hos in the article have a 25-page agreement that spells out everything from how they pay for home repairs (fifty-fifty all the way) to what happens if one of them gets married (the husband has no claim on the house) or dies (the surviving owner has the right to buy the other half before it goes to next of kin). “People are friends, and they’re honest people, but situations change,” says Andy Sirkin, a real estate lawyer whose firm crafted the agreement. “You need to be ready.”

Finding a friend to buy a house with can help you live in a better house, buy an investment property in a soft real estate market you otherwise couldn’t afford, and help you take advantage of the tax incentives and investment benefits of owning a house.  If you can’t afford a house by yourself, consider becoming a Co-ho.

How Will it effect us ? If you are a tax payer it is good possibility that Fed will have to bail them out meaning either tax payers pays for it or the federal debt is increased and the buck is passed on to future generation. If you are the future homeowner or planning to refinance then you might have to pay a higher interest rate. Both Fannie and Freddie are paying higher yields to get the new money because investors are loosing confidence in them. Eventually they will have to pass the cost to the consumer.

Either way it is a no win situation for an ordinary citizen. He will pay for it unless the housing crisis are resolved quickly.

Eligibility Rules:

• The tax credit is available for first-time home buyers only.
• The maximum credit amount is $7,500 or 10% of the purchase price.
• The credit is available for homes purchased on or after April 9, 2008 and before July 1,2009.
• If you own a home now you are not eligible. If you sold your home more than 3 years ago and rent now you are eligible.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

Example 1:Assume that a married couple has a modified adjusted gross income of $160,00. The applicable phase out to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0 the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $7,500 by 0.5. The result is $3,750.

Example 2:Assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625.

Payback:Unlike other credits this must be paid back over period of 15 years. Starting from second tax year after the purchase and continuing upto 15 years, taxpayers are expected to pay back. Assuming you have taken full $7,500 tax credit over 15 years payback the cost will be $500 a year. In a way it is an interest free loan.

The Foreclosed or Bank Repo Signs

• What’s in the Bill 

Major provisions of the housing bill, which is designed to help homeowners stay out o foreclosure and keep mortgage giants Fannie Ma and Freddie Mac afloat:

Foreclosure avoidance

Will help an estimate 400,000 homeowners avoid foreclosure by refinancing into 30-year fixed rate loans backed by the FHA. To qualify, borrowers would have to be spending more than 31% of their monthly incomes on the mortgages and living in the homes. Borrowers would also to share any profit with the government if they later sell the homes. Any lender would have to write down loan principal. Will insure up to $300 billion in mortgages; program starts Oct.1 and ends Sept. 30, 2011.

Aid for buyers

First-time buyers are offered refundable tax credits of up to $7,500 for homes bought between April9, 2008, and April 1, 2009.

Counseling

Provides $180 million for financial counseling for homeowners facing foreclosure.

Loan limit

FHA loan limit is raised in high-cost areas from 95% to 115% of area median home price, up to $625,500

Neighborhood help

provides $4 billion in grants for buying and renovating foreclosed properties in hardest-hit areas.

New Manager

A new independent regulator is established for Fannie Mae and Freddie Mac and  federal home loan banks to strengthen their oversight.

More Credit

The Treasury Department is authorized to increase its credit line for Fannie Mae and Fredie Mac and buy stakes in them, if needed.

Higher debt

Raises federal debt limit from 9.8 trillion to $10.6 trillion.

Sources: U.S. Senate and House, Associated Press, Reuters