Economic Stimulus Act of 2008

February 14, 2008 Posted In Economic News Finance

President Bush is signing the Economic Stimulus Act of 2008 yesterday, Wednesday February 13. Everyone is hearing all about the rebate checks that most Americans will receive sometime in spring according to when they file their taxes. The rebate checks will be $600 for a single taxpayer, $1,200 for married couples, and $300 per child.

However, what does the Economic Stimulus Act of 2008 have to do with the real estate market? The good part for homebuyers facing foreclosure is that FHA, Fannie Mae, and Freddie Mac will have an increase in the limit of the loan they can give to people wishing to purchase a home or refinance their home at a better interest rate. In the areas where the cost of living is very high, the percentage will rise from 87% to up to 175% whereas in other areas the percentage will rise from 48% to 65%. Along with this, it will also increase loan limits for single-family dwellings from Freddie Mac and Fannie Mae from $417,000 up to $729,750 that covers loans made between July 31, 2007, and December 31, 2008.

In smaller communities where the cost of living is not high, loans from either agency may not increase.

With the increase in loan limits, more people will be able to purchase homes since the government guarantees the loan. This is a great benefit for many that wish to purchase and receive all the added benefits that come with these programs. The increase in the loan limits along with the benefits will allow more homebuyers the opportunity to step up and purchase their dream home. In addition, individuals in ARM loans or high monthly payments will also be able to refinance through FHA, Fannie Mae, or Freddie Mac enabling them to avoid foreclosure.