By now most Americans are aware of the 8,000 dollar tax credit offered by the federal government for first time home buyers. This is a dollar for dollar credit that will be payed out on your tax return the following year. So if you are a first time home buyer and close on your house before Dec. 1st, 2009 Uncle Sam will write you a check for 8,000 dollars.
As the deadline grows near we are sure to see a spike in the amount of first time home buyers entering the market. The question many will be asking themselves is “will the tax credit be extended?” The answer like many things involving the federal government is… maybe.
If you are a first time buyer thinking of jumping into the market there is much to consider. The safe move is to purchase now. If you are in the market and there is nothing keeping you from buying at this very moment, this may be the best option. Buying now will guarantee your 8,000 credit next year, while eliminating the anxiety you may feel while waiting to see if congress will act.
While the safe bet is to buy now, not everyone is in the perfect position to buy at this moment. There are many reasons one might wish to push their luck and hope congress extends the tax credit. If you are in a lease that is not set to expire, or if you are having a hard time qualifying for a loan based on the length of time you have been at a job, or residence, waiting may be in your best interest.
If you find yourself in the latter group hoping the tax credit is extended there is some good news. Many experts feel there is a better than average chance the credits will be extended. Why will congress extend this tax credit? The same reason that congress does almost anything these days, the Economy.
The NAR(National Association of Realtors) has reported that the average home sale generates 63,000 dollars in ripple effect spending, or money spent buying a home not including the sale of the home itself. Ripple effect spending includes moving fees, realtor fees, title fees, furniture, lawn chairs, etc. They also estimate that up to 350,000 homes have been sold because of the tax credit. that’s a lot of zero’s to be adding to the slumping economy.
If you plan on waiting it out and rolling the dice, the odds may very well be in your favor. However do not expect your wait to be worry free. If congress does pass an extension to the tax credit, they will more than likely wait till the last minute to get as many people as possible to act early. So if your in a position to act now your blood pressure may well thank you, and if your plan is to wait it out may the force be with you!