The $8,000 Incentive Just Keeps Getting Better

Incentives to buy one of the fine properties in Homes & Land magazine just keep getting better, especially for first time home buyers. As you may already know, the government is offering an $8,000 tax credit available to qualifying first time home buyers. This was part of the Economic Stimulus Package aimed at reinvigorating the housing market. This deal just keeps getting better. When the incentive was initially offered it was treated as an $8,000 loan to the home buyer which included a payback plan. Subsequent to this initial offering, the plan was "sweetened up" so that the $8,000 credit, which home buyers would receive at tax time, no longer had to be paid back. The $8,000 went into the pockets of first time home buyers with no repayment plan attached.

Now the government has finalized a plan to allow first time home buyers to use the $8,000 tax credit at the closing of their home. As opposed to waiting for the refund until after the closing, this new plan will allow buyers who qualify to utilize these funds at the closing table. Previously buyers had to close on their home and then file an amendment to their 2008 taxes or wait to file their 2009 taxes next year, to take advantage of the credit. This new plan will reduce the overall cost of your home at purchase time. However, this free money from the Government won't last forever. It is only available to qualifying home buyers who purchase a home during 2009. So if this incentive affects you, its time to act fast with just six months left in the year.

The Fed has also made low mortgage rates a priority in its strategy to help the housing market. In order to achieve that, the central bank has been buying mortgage backed securities and Treasuries. Since this past fall, it has bought more than $460 billion of mortgage-backed securities and more than $125 billion of Treasury bonds. However, this too won't last forever. Investors worry the government's approach could lead to inflation and push up the government's cost of raising money, meaning higher interest rates. Signs of a recovery in the U.S. and across the globe may attract investors to move out of the relative safe Treasury market and into securities that may yield more, such as corporate bonds, stocks and other debt. While that's generally good news for the U.S., it will make it harder for the Fed to push rates even lower than they already are today. Regardless, today's mortgage rates coupled with buyer incentives and large inventories have created a market ripe for home buyers.

With all these variables affecting the housing market, it underscores the importance of using a Homes & Land REALTOR when buying or selling a home. Whether you're buying your first home, your retirement home or a vacation home from our Coastal Section (June, July and August issues), a Homes & Land RELATOR can explain how these factors and incentives may affect your real estate transaction. Contact a Homes & Land REALTOR today; they're the best in the business.