Interesting Fed Ideas on Mortgages and Tax Credits

Well, for those of you who may want to refinance in the next year or even couple of years, or for those of you who are first time home buyers, or just home buyers in general in the next few years, there may be some very good legislation headed your way. And, for the first news, and this is definitely happening to my knowledge, and may even be enacted at this writing, but the government is going to give all first time homebuyers a $15,000 credit for buying their new home.

This would be more like an interest free loan from how I understand it though. It would be given the year of purchase, and would then slowly be paid back, interest free, over the next several years in the taxes. I’m not a tax professional though, so don’t quote me on that! At any rate, congress is looking at this as a way to help boost new home sales, not as a fix-all for the horrid housing market right now, just as an added incentive for people to buy homes for the first time.

Now, onto some very interesting developments that could potentially save millions of homeowners hundreds of dollars off of their monthly mortgage payments, and also potentially thousands off the life of the their home mortgage loans. This one really got my attention, because we are currently looking to refinance our home as well, for purposes of saving mostly on the life interest of the loan, not really so much on the monthly payment, although that would certainly be an added bonus.

Congress is also thinking of passing a bill that would give homeowners, both those looking to initiate a mortgage for a new home purchase, and those looking to refinance existing mortgages, a very low interest rate – as low as 4% as long as they have decent credit. The idea behind this is that these mortgages would supposedly be government backed because the government can finance loans very cheaply.

The goal here is to free monthly mortgage payment money up for homeowners so that they (hopefully) will go out and spend that money, thereby increasing the economy’s strength and adding the suffering consumer spending outlook that we are dealing with right now.

However, critics of this idea are saying that they don’t necessarily believe that people will spend this money, instead they believe they will save it, which is the trend right now. Who’s to say whether it would be good or not in the end, but it sure is enticing as a homeowner to think about!