The Housing and Economic Recovery Act

The 2008 Housing and Economic Recovery act was signed this morning by President Bush. What does this mean to you? Many homeowners will now have access to more affordable financing. First time homebuyers will also receive a tax credit up to $7500 to help them enter the housing market.

In addition, some 400,000 at risk borrower will be able to refinance their loans to prevent possible future difficulty. These borrowers will be able to get out of their high cost and adjustable rate mortgages and enter into fixed rate mortgages insured by the federal government.

This act is not a bailout for irresponsible borrowers who are seeking to avoid foreclosure by refinancing so they can sell their home. There are several requirements that must be fulfilled to qualify for assistance. Some of these requirements are as follows:

Home must be your primary residence
Must have received a loan between January 2005 and June 2007
Debt to income ratio cannot be under40%
May or may not be current on mortgage (should not be more than 90 days late)
Must retire all debt including lines of credit
Cannot take out a new HELOC for 5 years