Federal, State and Local Changes Being Made to Boost the Housing Market
In an effort to spark the economy and to recover from the foreclosure crisis, federal officials have been working on a number of reform programs. Of course, in order to have a positive effect on the economy, these programs also need to be developed at the state and local levels as well. One area that all three levels of government are focusing on is trying to stimulate the housing market, which will then help give the economy a boost.
“There’s a rule of thumb that approximately 30% of the value of the purchase of a home, let’s say the home was purchased for $100,000, 30% over and above the purchase price is going to go into the economy, and that starts with the transaction itself,” said Nanci J. Rands, who is the director of the Michigan Association of Realtors. “Money goes to pay the commissions, title insurance…movers, painters…the purchase of furniture – the list goes on and on and on. The purchase of the house is just the beginning – it begins the whole process…and has a good effect on the economy.”
So, what are some of the changes that are taking place? First, the FHA has increased the loan amounts it offers and has created more programs to help low-income and first-time buyers with their home purchases. In addition, mortgage brokers and banks have made some changes to the types of loans they offer to homebuyers. Namely, they have reverted back to traditional mortgages and have increased the requirements for credit scores and down payment amounts. While this may seem undesirable if you have a less than perfect credit rating, implementing these changes will help prevent people from purchasing homes the aren’t really ready to buy.
“The sooner we eliminate risky lending due to fraud, the foreclosures will slow down. Although I don’t know what percentage of foreclosures are fraud related, one less foreclosure is good for this market. With the spring market under way, I see positive things in the future for our market,” said Mason Miller, who is the vice president of sales at Flagstar Bank.
In addition to federal changes, each state is also making reforms to try to improve the housing market and the economy. In Michigan, for example, the Principal Residence Exemption Act has been put into place. With this Act, homeowners that were forced to move but are unable to sell their old homes can receive tax breaks by claiming two principal residences. Of course, certain requirements apply. For example, the home has to be on the market and it cannot be used for commercial purposes or lease. In addition, the homeowner must still live in Michigan. Nonetheless, the Act helps support the Michigan housing market by providing people with an incentive to stay in the state.
Since changes are being made at state levels and local levels, homebuyers and sellers should look into recent developments in their area in order to be certain to save or make as much money as possible.
About the Author:
Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.byownermls.com/, a For Sale By Owner MLS service, the leading real estate search engine of homes for sale by owner (FSBO). For more information, please visit http://www.byownermls.com/.
