According to an article in the Star-Telegram, the home buyer tax credits have been approved and are expected to be signed into law by President Obama. For first-time home buyers (or anyone who has not owned a home in the past 3 years), legislators extended a tax credit of up to $8,000 which was originally scheduled to expire at the end of the month and added another tax credit of up to $6500 for home buyers who have lived in their current home for at least five years and want to buy a new home. To qualify, home buyers must sign a purchase agreement by April 30th and close by June 30, 2010. For members of the military serving outside the United States for at least 90 days, the home buyer tax credit will be extended until June 30, 2011.
The article said:
"About 1.4 million first-time home buyers had qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have bought their home without the credit."
The extension is definitely good news for the real estate industry which has experienced sales and pricing slumps due to the foreclosure crisis, increased job losses and the credit crunch. But is it good news for home buyers? For those home buyers who are financially stable and prepared for homeownership, yes. But for those home buyers who are already struggling financially and heavily dependent on credit for everyday expenses, the tax credit could tempt them to take on homeownership at a time when they're not ready. Also, we need to make sure that mortgage lenders are doing their part to provide loan products that are reasonable and won't place homeowners in another foreclosure crisis. Legislators...what are we doing to insure that the loans these home buyers receive are not the same toxic sludge that created our current foreclosure mess?