First-Time Home Buyer: Obama's Tax Credit, Home Values, & Mortgage Interest Rate

In today's economy, it is easy to be gun-shy about buying a home, especially if it is your first home. Who wouldn't be? This is your biggest debt but, remember, it is also your largest asset. There are five major reasons why the time is now:

• First Time Home Buyer Tax Credit is $8,000.
• Home Values are down.
• Inventory is up.
• Mortgage Interest Rates are at their lowest.
• New Government Laws now extend the home buying process.

The First Time Home Buyer Tax Credit is part of the American Recovery and Reinvestment Act of 2009 that President Obama signed into law this year. A first time home buyer is one who hasn't owned a home within the last three years. This act allows married couples with income of up to $150,000 or a single person with income up to $75,000 to get an immediate tax credit if they close their home purchase on or before November 31, 2009. To receive this check from the government, you are allowed to amend your 2008 tax return so that you don't have to wait until you do your 2009 return in 2010. Home values have been down for the last 2+ years. But with pending home sales up for the 5th straight month and housing starts up for the first time, values will, and have been in some markets, start to increase. With inventories high, we are in a "buyers" market meaning that sellers are more willing to compromise on price and give concessions on closing costs. This means that the first time home buyer may be able to purchase a home with less money out of their savings account. But as inventories start to shrink, home values will start to raise and the market will then switch to a "sellers" market with little or no concessions. Normal mortgage interest rates hover above 6.0% to 6.5&. Currently, they are around 5.25% or less and, still, at historical lows. Depending on the loan amount, this could mean a difference of $250.00 or more in a monthly payment. The Federal government has passed two new laws, Home Value Code of Conduct (HVCC May 2009) and Mortgage Disclosure Information Act (MDIA August 2009). Both of these laws have added days to the mortgage process-no longer can a loan be closed within 15 – 30 days. Added to this, counties across the country have cut back on the recording offices' hours. Offices can often be closed on different days of the week, causing delays in recording your home loan in a timely manner. By waiting until the last minute to start the home purchasing and mortgage loan process, you could miss the November 31, 2009 deadline. Be one of the lucky ones. Start now. Work with a qualified loan originator/Certified Mortgage Planning Specialist to find out how much home you can afford before you start looking for your first home. This will allow you to take advantage of the $8,000 First Time Home Buyer Tax Credit before it expires on November 31, 2009. To further assist you, here's some more information on the First Time Home Buyer Tax Credit.