The economic stimulus package penned by House leaders and President Bush 2 weeks ago is one signature shy of becoming a law. It was passed by the House last week, and after some added provisions by the Senate, it has won an overwhelmingly positive vote in the Senate. It should be in the President’s hands next week, where he has promised swift action.
The added provisions by the Senate put the tab at about $170 billion and added an allowance for low-income seniors and disabled veterans to get a rebate check. Here are some basic highlights of the current bill:
In the tax rebate portion of the bill, checks will be issued to 117 million low and middle-income Americans, 20 million senior citizens living on Social Security and over 250,000 disabled veterans. As the bill stands now, rebates will be sent out as follows:
- $600 for individuals; up to $1,200 for couples.
- $300 per dependent child up to age 17
- For those who received minimal or non-taxed income (under $3,000 per year), the rebate would be $300.
Business Tax Breaks
Under the proposed bill, companies can write off an additional 50% of new investment expenses in 2008. Small business would be allowed to write off the entire cost of new investment expenditures up to $250,000. “Small business,” for this purpose includes companies with overall investments of less than $800,000 in 2008.
In an effort to fuel a struggling housing market, the bill allows the country’s main loan insurers to cover loans up to $729,750.
For the Federal Housing Administration (FHA), the loan limit would be temporarily raised through the end of 2008 from $362,000 to $729,750. For Fannie Mae and Freddie Mac, the conforming loan limits would raise from $417,000 to $729,750.
Previously, all loans over the current conforming limit ($417,000) were tagged as jumbo loans because of the risk associated with financing a higher cost home. This risk equaled extra cost and higher rates for borrowers. The new bill will hopefully loosen some of the remaining credit crunch and encourage buyers to take advantage of the large inventory of homes on the market. This will also help home sellers in higher cost areas that might be facing foreclosure as more buyers enter the market and take advantage of the new financing provisions. This is great news for lenders and consumers to offer more loan options and get the jump start the housing market needs.
The bill (HR 5140) is headed for the White House next week. Once signed, lenders can take the housing provisions into effect and individual taxpayers can expect to receive the rebate checks as soon as May 2008.