Don Davis Ph:360-652-9994 email:dond@htlnw.com

Home Buyers Tax Credit

The current tax of up to $8,000 for first time home buyers and up to $6,500 for repeat home buyers is scheduled to end the end of April 2010 and the loan must close before July.  It was debatable whether or not it was going to get extended last October when congress extended it six month. 

In all likelihood this will be the end of it.  The tax credit itself did very little to stimulate the housing market.  I dare say locally we probably would have sold just about as many homes without it as we did with it.  The government left the marketing of the tax credit to Realtors and most buyers did not understand how it worked or if they would qualify for it.  Personally I only had a handful of clients that even knew about the tax credit and only one person was buying a home because of the credit.  Everyone else was buying a home because they wanted to take advantage of the low prices and low interest rates; the tax credit was only a bonus and not the reason to buy.

It is quite doubtful that the credit will be extended again once it expires in April 2010.  When it’s gone, it’s gone.  And while $8,000 may not seem like a lot when you are buying a home for $250,000 for example, it could mean up to six months of mortgage payments could be put in to savings and used as a buffer should you need it.

I don’t believe that making a decision to buy a home because you get an $8,000 tax credit makes and sense.  The decision should be based on whether you want to own a home of your own and if you can comfortably afford the mortgage versus your rent.  If you are paying $1400 mo to rent a home, have a stable job with stable income and expect to live in the area for five years or more then buying a home with up to a $2,000 payment would probably make sense.  If you are renting for $800 mo and you employment prospects are uncertain, then the tax credit should not be a reason to buy a home.

However if you take all the current market elements, this is an outstanding time to buy a home.  Yes you could get up to $8,000.  Home prices are stable and very affordable.  Interest rates are currently at or very near historic lows, but won’t be for long.  All it takes is any or (gasp) all of these things to change and it could cost you a whole lot more to buy the same house.

If any of the above items change, it could have an impact on what it costs to buy a home, if several or all, which eventually will happen, change then the cost of buying a home later could be very substantial if not prohibitive. 

 We encourage you to contact us and see if this is the right time for you to consider buying a home of your own.