1st Time Buyer Tax Credit to be Extended?

THIS IS THE STIRRING RUMOR BUT LET'S EXAMINE IT MORE CLOSELY...

As most of us know the clock is ticking on the Housing & Economic Recovery Plan's $8,000.00 1st time buyer tax credit for qualified buyers. The deadline to close on a home and receive this credit is Nov 30, 2009.

But there's word now that the credit may be extended. US News & World Report states that the tax credit is one of a number of factors that have worked to bolster the housing market in recent months. Even more important than the government's incentive has been the increasing affordability of real estate, says Mike Larson of Weiss Research. Rates on 30-year fixed mortgages fell to just below 5 percent this week, according to Freddie Mac. Meanwhile, home prices at the national level have plummeted more than 30 percent from the second quarter of 2006. The first-time home buyer tax credit "is the icing on the cake, not the cake itself," Larson says. "Falling home prices have worked their magic. That's why we are where we are." Still, Larson believes that the tax credit has played a key psychological role in pushing buyers off the sidelines and that its expiration would take some of the wind out of the market's sales. For his part, Zandi estimates that the credit will add nearly 400,000 new and existing home sales by the time of its scheduled expiration.

Extension efforts: Although the credit's deadline isn't until the end of November, buyers may need to make an offer on a house by the end of September to take advantage of it, according to the National Association of Realtors. (That's because it's taking longer to complete transactions these days, the trade group says.) In the face of this looming deadline, housing and real estate interest groups have stepped up their efforts to convince lawmakers in Washington to extend the credit. Sen. Johnny Isakson, a Georgia Republican who worked in the real estate business before turning to politics, has been pushing for an expansion of the credit for some time. "December through February is historically the worst time for home sales anyway because of the winter months, so with the credit ending November 30, you have a double whammy" on the market, Isakson says. On Wednesday, he and several other lawmakers-including Senate Majority Leader Harry Reid, a Nevada Democrat-introduced a bill that would extend the tax credit for an additional six months. (Isakson had previously introduced legislation to extend the credit by a year.)

Opposition: Supporters of an extension of the credit will have to overcome mounting concerns about budget deficits and rising government spending. "There is no doubt about it that, compared to when we were working on this last winter, people are asking questions about the cost, when before it was not as much of a factor," says Jerry Howard, the president of the National Association of Home Builders. Zandi estimates that it would cost between $15 billion and $17 billion to extend the tax credit for another six months, which he considers money well spent. "If you extended it to mid next year . . . by then the job market will be stable enough that we can allow the tax credit to expire and it won't totally submarine the housing market," he says.

So if you are a 1st time buyer who wants to receive this tax credit with certainty, your best bet is to do the following:

- Determine your mortgage readiness and isolate your mortgage product with a licensed, Better Business Bureau accredited lending specialist who cares about you and your family's short AND long term housing and fiscal needs

- Get with a professional, certified Buyer's Agent, one who also cares about you and your family's needs, preferences, desired amenities, locale and affordability

- Get out there NOW in the house hunting market! In order to receive the tax credit a qualified buyer must close on the property by Nov 30th

- Don't be complacent...the system WILL clog up with volume at all levels, it already is: this means appraiser volume, broker, Realtor, lender, processor, underwriters, SELLERS (yes, this means banks and asset managers on bank-owned homes taking even longer in reviewing offers), even the county recorder's offices...EVERYWHERE. This means longer waiting periods and lag time between each milestone in the home buying process which means waiting until later this month or next is certain to invite complications and likely failure.

(For more on the basics such as who qualifies and on what type(s) of homes please see my blog entry at):

http://activerain.com/blogsview/1134030/-first-time-buyer-tax-credit-simplified

Thanks for reading and good luck out there! Remember, my team and I are here to help!

Jamie Woods ~ Senior Loan Officer ~ FHA/VA/USDA Specialist ~ SARA Mortgage & Financial, LLC ~

Office: (603)-816-0255 Cell: (603)-965-8241 email: jamie@saramortgage.com

web: http://www.mortgagemagician.blogspot.com

Licensed by the NH Banking Dept

Source: US News & World Report