Blog
April 15th, 2010

Don’t Let the Homebuyer Tax Credit Force Your Homebuying Decision!

by

 

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.

You’ve already told us how you feel about the homebuyer tax credit in our poll, why not contact Senators Baucus, Dodd and Isakson and tell them how you feel.

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.”

Share and Enjoy:
  • email
  • Print
  • RSS
  • Add to favorites
  • Yahoo! Bookmarks
  • Facebook
  • Twitter
  • Technorati
  • Digg
  • del.icio.us
  • Google Bookmarks
  • StumbleUpon
  • Yahoo! Buzz
  • Mixx
  • BlinkList
  • Live
  • Reddit

6 Responses to “Don’t Let the Homebuyer Tax Credit Force Your Homebuying Decision!”

  1. lisa Says: April 27th, 2010 at 6:24 am

    I have been searching for my first home and have not found the right one just yet. I was counting on the $8,000. tax credit. I am hoping it will be extended. For first time home owners $8,000. is a big deal breaker.

  2. Tim Manni Says: April 27th, 2010 at 9:02 am

    Lisa,

    Thanks for commenting, best of luck. Hopefully you find the house that’s right for you!

    -Tim

  3. saul rincones Says: May 22nd, 2010 at 3:59 pm

    i am a first time home buyer. im not concerned about the tax credit as much as the closing costs. they r outrageous. what is a normal closing cost percentage?

  4. Tim Manni Says: May 24th, 2010 at 12:55 pm

    Saul,

    While there’s no average per say, typical closing costs tend to run about two percent of the loan amount. Closing costs can include things like inspection and appraisal fees, title insurance, preparation fees, etc. Closing costs also depend on things like your loan amount and property type.

    If you want to compare closing costs, ask a lender to fill out a good-faith estimate (GFE) for you so you can see exactly what’s going into your closing costs.

    Hope that helps, don’t hesitate to leave another comment if you have another question. Thanks,
    Tim

  5. First Time Home Seller Says: May 28th, 2010 at 12:53 pm

    I am selling my house for the first time. My buyer backed out of the contract 10 days before 4/30 because of RAdon problem which I later check to be no problem at all. They probably just wanted another house instead and doesn’t want to leave me with the deposit. Now, my house is not even showing. The first time home buyers just stopped seeing houses after 4/30. I really hope the tax credit will be extended. If not, I hope there will be some kind of announancement from the government saying that. The maket is stalling because people are guessing and hoping the tax credit will come back and they are just waiting for it.

  6. Tim Manni Says: June 1st, 2010 at 10:14 am

    First-Time Home Seller,

    You know, you make a great point that I haven’t heard mentioned anywhere else: “If not, I hope there will be some kind of announcement from the government saying that. The market is stalling because people are guessing and hoping the tax credit will come back and they are just waiting for it.”

    The unknown can really mess with market conditions. I think an official announcement hasn’t been made yet b/c Washington still holds the option of another extension in its back pocket. That being said, I agree with you: let’s get an official announcement (whatever it is) and move on.

    Great comment, hope to hear from you again soon,
    Tim

Leave a Comment

Receive Updates via Email

Delivered by FeedBurner

About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

Connect With Us

  • rss feed icon
  • facebook icon
  • twitter icon

Compare Lowest Mortgage Rates

$