Oct 28, 2009
First time home buyers is inevitably anxious right now, especially if they’re not sure they will be able to find their dream home next month. On November 30, the credit is to be finished although the Obama administration is looking into extending it past the due date in order to make it available to more home buyers.
The situation about the $8,000 first-time home buyer credit is very fluid right now. According to Housing Secretary Shaun Donovan and Treasury Secretary Tim Geithner, the government may extend it for a “limited period”. However, several proposals are being considered. There are very generous and least generous proposals that are being looked into.
Jaret Seiberg from the Concept Capital’s Research Group said that, “there is bipartisan compromise to extend the credit through spring and expand it to existing homeowners who are stepping up to a different home”. Because of this, policymakers are considering giving up to $6,500 in credit for homeowners who want to trade up their homes, as long as they live in their current residence for at least five years.
Not everyone can take advantage of the first-time home buyer credit though. This is because in order to get the full amount, the applicant should have less than $125,000 in adjusted gross income ($225,000 for married couples). Aside from this, the provision is only applicable for homes that are sold for $800,000 or less. The contract should be signed by April 30, 2010 and must be closed by June 30 of the same year to qualify for the home buyer credit.
The home buyer credit has attracted supporters and critics alike. Supporters say that it has helped boost home sales at a time when it is needed most. Extending it will further improve sales and help stabilize prices. However, critics say that while it has helped in some ways, it is ill-targeted and therefore not cost-effective. They say that only 10 to 20 percent of 2 million qualified home buyers bought homes with the credit in mind. In other words, 80 to 90 percent would have bought anyway even without the credit.
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