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Make The Stimulus Package Work For You

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Here are the highlights.

woman putting lots of cash into her wallet

Financial expert Danielle Hoston: Two weeks ago, I described foreclosures, short sales, and REOs. This past week, millions of homeowners (and even those that don't own homes yet) received great news in the new stimulus package. Here's a short summary:

For homeowners:
If you have been unable to benefit from current lower interest rates or are currently "underwater" on your loan amount because the real estate market decline has reduced your equity below current refinancing guidelines, you'll be glad to know that new mandates are on the way that may save you thousands of dollars. Furthermore, current loan modification guidelines will be federally mandated even if you haven't missed a payment.

For more information on the Homeowner Affordability And Stability Plan, click here.

If you are an investor or a speculator:
Many willing investors have been stifled from making more investments because of the credit crunch and a bleak economic outlook. Your ability to purchase investments and the value of your current and future investments depends on a rebound in real estate values and increased consumer confidence.

If you have yet to buy a home:
You are the lucky beneficiary of an unprecedented tax credit of $8,000 for first time homeowners who close escrow by December 2009. In simple terms, tax credits equal more cash to you. If you owe $1,000 at the end of the year, this credit will award you $7,000. If you are owed $1,000 in a tax refund, your refund will be increased to $9,000.

What we all get:
Tax breaks, tax breaks, and more tax breaks...

Undoubtedly, there will still be foreclosures as no stimulus package can save every home. In fact, only an estimated 1/3 of the homes threatened by foreclosure will be rescued. If you are unemployed and unable to make your mortgage payment, my advice is simple: start short sale proceedings immediately and save yourself from falling victim to the foreclosure process.

Critics of the stimulus package argue that lower interest rates are not enough and demand that principal reductions of loan amounts are in order. The fact is, real estate markets go through growths and declines as part of the normal market cycle. It is not logical nor does it fit any real estate cycle that homes will not only recoup their value but will likely appreciate over time. Don't look a gift horse in the mouth. Embrace these savings as an opportunity to mitigate past financial mistakes or to do more things right with your money.

Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future.
- John F. Kennedy

We want to hear your thoughts! Does the stimulus package benefit you? Do you think it will work?

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