Key Provisions in The Housing and Economic Recovery Act of 2008
August 12, 2008
On July 30, 2008, President Bush signed H.R. 3221, the Housing and Economic Recovery Act of 2008 (the “Act”).
The Housing Act is intended to revamp the housing finance industry, encourage home ownership and help prevent foreclosures. Below is a summary of some of the tax provisions in the bill that will affect current and future home owners:
* The Hope for Homeowners Program: The Act creates a new Federal Housing Authority (FHA) program designed to help borrowers in danger of losing their homes to foreclosure. Eligible homeowners may be able to pay off their original (foreclosing) lenders with a fixed-rate, 30-year-term mortgage for up to 90 percent of the appraised value of the property. Eligible homeowners are those who originated their loans before January 1, 2008, spend more than 31 percent of their monthly income on their mortgage, and are currently in danger of foreclosure. Borrowers would have to share future equity with the FHA. The program is completely voluntary; banks may elect not to participate. The program begins on October 1, 2008 and ends in September of 2011.
* Temporary mortgage foreclosure protection for military members: The Act provides mortgage foreclosure protection for members of the U.S. Armed Services by temporarily increasing (through December 31, 2008) the maximum loan guarantee for VA loans. The period a lender must wait before initiating foreclosure proceedings after a service member returns from service is extended from 90 days to 9 months. Increases in mortgage interest rates above 6 percent are suspended during the period of service and for one year after a service member ends service. This provision will sunset on January 1, 2011.
* Temporary tax “credit” for first-time homebuyers: First-time homebuyers of a principal residence purchased after April 8, 2008 and before July 1, 2009 may take a refundable tax credit of 10 percent (up to a maximum of $7,500; $3,750 for married persons filing separate returns) of the purchase price of the property. The credit is phased out for individual taxpayers with adjusted gross incomes (AGIs) ranging from $75,000 to $95,000 ($150,000 to $170,000 if married filing jointly). However, taxpayers must repay the credit taken over 15 years in equal installments as a surcharge on their annual income tax return.
* Temporary standard property tax deduction for taxpayers who don’t itemize their deductions: For 2008 only, taxpayers who do not itemize their deductions will be allowed to take a real property tax standard deduction (in addition to the standard deduction) of up to $1,000 if married filing jointly ($500 for all other filers).
* Reduced homesale exclusion for nonqualified use: For sales and exchanges of a principal residence after December 31, 2008, the $250,000 ($500,000 if married filing jointly) homesale exclusion won’t apply to the extent the gain is allocated to periods (not including any period before January 1, 2009) during which the property is not used as the principal residence of the taxpayer or the taxpayer’s spouse.
These are just a few of the provisions in the new act. For more information, please visit ‘Housing Rescue Bill…’
Related Posts- PMI Insurance: New Tax Break Helps with Mortgage Insurance Premiums
- IRA withdrawal for 1st time home purchase
- What to Do with Your Tax Refund or Other “Found Money”
When Will the Market Get Back to Normal?
July 11, 2008
That’s what people are asking (or at least thinking) about the current stock market.
Well, I hate to break the news, but this IS normal! The stock market goes up AND down. It’s a cycle, made up of periods of growth and periods of retraction, of good times and bad times.
The market goes up, and periodically it goes down too (how soon we forget). Right now we are in a retraction. However, those who understand that market moves in cycles, and who adopt a reasonable investment policy, diversify and rebalance their portfolio as needed - these people will have positive long-term investment experiences.
Those people who “forget” that the market is a cycle and panic when the market goes down will have negative experiences because they make decisions based on fear that cost them money in the long run.
So while this may be “normal”, there are some things you can do to improve your finances while we are waiting for the next expansion period in the stock market cycle:
- Make sure you are properly diversified. You should have an overall allocation that matches your risk tolerance, your goals, and your time frame.
- Don’t try to time the market. People who try to time the market often miss the best days (or weeks or years), causing them to lose out of hundreds, thousands or even tens of thousands of dollars in growth in their portfolio.
- When reviewing your portfolio, remember to view the big picture. Some investments/accounts are more aggressive than others and will increase/decrease faster than others. You need to view the portfolio as a whole to get a true understanding of how your portfolio is performing.
- Review your portfolio expenses. Do you have funds with commissions or high annual operating expenses? The less you pay in fees, the more money you have to work for you.
- If you are retired and are already withdrawing from your nest egg, now’s a good time to review your spending. Are there any areas you can cut back on? Do you have any hobbies or interests that can be turned into money making ventures?
- If you’re in the accumulation phase, now’s a great time to increase your retirement contributions. Remember your goal is to buy low and sell high… well now is a great time to buy low!
If you’d like to learn more about the economy and the stock market cycle, here are some good articles for you to read:
Understanding Cycles by Investopedia - while I don’t agree that you should be timing the market cycles, this article does a great job explaining the economic and market cycles.
Presidential Elections and Stock Market Cycles - an interesting article about how the presidential elections and stock market cycles relate to each other.
How to Profit from Maket Volatility by Christine Benz of Morningstar.com - this is one of my favorite websites, click on the Personal Finance tab for tons of articles on a variety of personal finance issues.
Related Posts- Does the market have you feeling squeamish?
- Why You Need Bond Funds in Your Portfolio
- What to Do with Your Tax Refund or Other “Found Money”
Jump Start Your Finances - New Consulting Service
June 29, 2008
Are you:
- Overwhelmed by your company’s 401K choices?
- Confused about investment products?
- Living from paycheck to paycheck?
- Saving enough to meet your financial goals?
- Getting all the tax deductions you are entitled to?
Jump Start Your Finances is a consultation session for younger individuals and couples, who have important questions about their finances, but who may not yet need a written financial plan.
The Jump Start Your Finances Consultation will teach you:
- How to choose the right investments for you,
- About diversifying your portfolio and why it’s important,
- Why you should check your credit every year,
- How to create a realistic and workable spending plan,
- About basic income tax planning, including how much you should withhold from your paycheck.
The Jump Start Your Finances Consultation is a 2 hour consultation, in person or via telephone, and is perfect for recent college graduates, first-time employees and beginning investors. Here’s what you’ll get from your financial checkup:
- 1-on-1 coaching session with a CFP/CPA
- A review of your 401K or other employer-sponsored plan
- A Prioritized “to-do” list
- Educational worksheets on financial planning topics
Ready to get started? Contact Kristine McKinley at 816-739-4853, or email us at kristine@beacon-advisor.com to setup your consultation today!
Looking for the perfect gift this holiday season? A gift certificate for the Jump Start Your Finances Consultation is a thoughtful gift for the holidays, graduation, weddings, or any occasion! There’s no better gift than the peace of mind that comes with preparing for your financial future.
- Financial Literacy
- 401K Options
- New financial aid tool helps families determine whether they will qualify for federal financial aid
Debit Card Fraud Much More Damaging Than Credit Card Fraud
June 28, 2008
While I was on vacation this week, some thief was busy emptying out my checking account.
I have always loved the convenience of debit cards, but this recent experience has me re-thinking the cost of that convenience.
First, your liability if you are a victim of debit card fraud is greater than if someone steals your credit card or uses your credit card to make unauthorized purchases.
With credit cards, your liability for unauthorized transactions is limited to $50. However, most major credit card issuers have a zero liability policy, so you typically aren’t liable for anything if you are a victim of credit card fraud.
With debit card fraud, your liability is limited to $50 only if you notify your financial institution within two business days after realizing their card has been lost or stolen. After that, your liability is limited to $500 if you report any suspicious activity within 60 days of receiving your account statement. After 60 days, your liability is unlimited, so it’s very important to check your statements on a regular basis.
Continue Reading Debit Card Fraud Much More Damaging Than Credit Card Fraud
Related PostsTraveling Smart During the Hot, Pricey Summer of ‘08
June 17, 2008
Summer is when we hope to get time off to relax. But with regular gasoline prices nearing $4 and energy prices pushing tourism expenses higher on everything from plane fare to meals out, paying for this year’s summer vacation might be a significant source of financial stress.
A recent GfK Roper Reports survey indicated that 55 percent of respondents said they are limiting “discretionary expenses like eating out and vacations.”
If that sounds like your agenda, here are some ways to save on travel this summer:
Stay closer to home: Is it that boring around home? Rather than flying across the country, check out the tourism website for your state or the nearest adjoining state to yours and just see what looks interesting. Those websites offer coupons, too. Also, sign up for e-mail from your local transit agencies and check their websites - you might hear about special deals at local museums or parks and free parking sites where you can leave your car before you pick up the train or bus.
Continue Reading Traveling Smart During the Hot, Pricey Summer of ‘08
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