Obama Expected to Sign Legislation for Tax Credit Extension
Congress voted this week to extend the tax credit for first-time home buyers, and President Barack Obama is expected to sign legislation today. Here’s what you need to know if you’re hunting for a home loan.
The original tax credit program is set to expire on Nov. 30. But under the extended program, home buyers will have until April 30, 2010, to sign a purchase agreement. They must close on mortgage loans by June 30.
Tax Credit for More Home Buyers
The tax credit is for first-time home buyers who have not owned a home in the previous three years. The tax credit worth up to $8,000 can be deducted on federal income tax returns. New home buyers are still eligible for that amount under the program.
However, the expanded program is supposed to allow people who have lived in their home for at least five years to receive a tax credit of up to $6,500 when purchasing another home. So if you’ve been looking for a mortgage for a new house, this may be an incentive to get moving on selling your current home.
Higher Income Eligibility
The legislation for the extended program allows people with higher incomes to qualify for the tax credit, according to an article in the Chicago Sun-Times. The credit phases out for individuals who earn above $125,000, up from $75,000. For joint filers the credit phases out if they earn more than $225,000, up from $150,000.
Current Mortgage Rates Are Low
With mortgage rates still so low, buying a home now may be more affordable than waiting until the housing market recovers more. Still, you may experience some tradeoffs for moving now. First, you may not be able to sell your current home at the price you hope to get. It’s a buyer’s market, so you may need to make some concessions or offer some incentives to get your property sold.
Second, if you plan to get a home loan to buy another house, you only have a limited time to close on it to qualify for the credit. If you don’t close by the deadline, you lose out on the tax credit even if you had been counting on it to help with the costs of buying a new home.
Mortgage Quotes
Find mortgage quotes from several lenders to get an idea of how large of a mortgage you can get. Run the numbers carefully to decide if you really want to move at this time. Just because the government is offering a tax credit for home buyers doesn’t mean that purchasing a home is the right choice for you.
Tags: current mortgage rates, home loan, mortgage, mortgage loans, mortgage rates
