Don’t Let the Homebuyer Tax Credit Force Your Homebuying Decision!by Tim Manni
We received a comment yesterday — on a post from a few weeks back — from a reader who was checking in on the homebuyer tax credit, asking if I heard anything new regarding another possible extension.
The comment detailed how our reader and her husband were actively looking for a home and were concerned that they weren’t going to find the right one before the homebuyer tax credit’s expiration date (contracts must be signed by April 30):
My husband and I have been looking for about 4 weeks now and are starting to get nervous because we still haven’t found the house for us. We are pre-approved and have been very active, out every weekend, scheduled showings and open houses. In 4 weeks we have looked at 32 houses (yes we are picky, it is our first house!)
When I responded to the comment, I told our reader that being picky is a good thing, after all, it’s your first house. However, while it was sounding like this potential homebuyer was doing all the right things, I read something that quickly raised a major red flag in my opinion (emphasis added):
I thought for sure we would have the time to find our dream home but time is ticking away. It would be great to know we had a little more time and not feel forced to make a decision before we are ready.
Potential buyers should not rush or make homebuying decisions solely based on the tax credit and its pending expiration! The homebuyer tax credit is an incentive to get potential buyers into the market. Factors like low mortgage rates and cheap real estate prices are what make potential transactions more possible and affordable. These should be your primary considerations — tax incentives are just a bonus.
Will the Homebuyer Tax Credit Be Extended Again?
Yesterday I wrote a post titled “Second Extension of Homebuyer Tax Credit Seems Bleak.” The notion of the post was based on the fact that several lawmakers were quoted as saying a second extension was not forthcoming:
“That’s not on the table,” Senate Finance Committee Chairman Max Baucus, the chamber’s top tax-writer, said today in Washington.
“I think that’s pretty much it,” said Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat.
Nor is the tax break’s chief Republican sponsor demanding an extension. “I said when we passed it before that I would not come back to the well and I’m not going to,” said Senator Johnny Isakson of Georgia.
Not a Be All, End All
The comments from Senators Baucus, Dodd and Isakson aren’t a be all, end all for the tax credit. “Chances are lawmakers are going to wait until the last minute as they did last time,” said HSH VP Keith Gumbinger. “If the deadline pushes people into the market, the goal will be achieved, and if extended too early, it loses that immediate impact.”