jolenta's Blog: Homebuyer Tax Credit

It's no secret the first-time homebuyers tax credit has been wildly successful. The prospect of free money to the tune of $8,000 has kept consumer interest steady in an otherwise dismal housing market. But the credit is due to expire on November 30th, 2009. A number of forces are at work that will make it impossible for some who want to buy before the deadline capable of closing in time. Compounding the problem are the way appraisals are being done and the inability to lock rates with less than 30 days. Moreover, short sales and foreclosures are on the increase and Spring is expected to bring even more new inventory on the market. After all, sellers who have held back for better markets can only hold out so much longer. With all these forces at work, the…

The new tax credit for first-time homebuyers that's included in the economic stimulus package was slashed from the previously proposed $15K to just $8K and a far cry from the $20K the homebuilding industry wanted. Analysts expect the credit consisting of 10% of the value of any home up to $8K to have a smaller impact on the U.S. housing market than previously hoped. Last year, Congress enacted a $7,500 tax credit for first-time buyers (which had to be paid back over 15 years) and the impact on home sales was negligible.This time the tax credit is limited to first-time buyers who act between the start of 2009 and the end of November 2009. First-time buyers are defined as those who haven't owned a house for at least three years.

The credit of 10…