First Time Home Buyer

Those who have yet to take advantage of the hefty $8,000 First-Time Homebuyer Credit may have more time than they think to get in on the action. It seems that Congress is hard at work trying to extend the credit past its current deadline of Nov. 30, 2009. If the extension is passed, the credit will be available for a "limited" period of time, according to Treasury Secretary Tim Geithner and Housing Secretary Shaun Donovan.

Specifics of the Extension

Right now, the details are still sketchy, but what has been released to the public about the extension is the following:

• Possible Spring deadline: The credit extension, if passed, will likely stretch out to Spring. With the new proposal, contracts to buy a home would have to be signed by April 30, 2010 and deals would have to be closed by June 30 to qualify.
• Current homeowners included: The credit may extend to existing homeowners who are stepping up to a different home (must have lived in current home for five years).
• New dollar amounts proposed: In addition to the current $8,000 credit for first-time homebuyers, $6,500 may be available for homeowners looking to trade up to a bigger residence (homebuyers must have AGI of less than $125,000 ($225,000 for married couples filing jointly).

While the credit has yet to be approved, it's passage looks promising. If you're thinking of taking advantage of the credit this time around, it's doesn't hurt to start your search for affordable mortgage rates now.

Will you take advantage of the homebuyer tax credit if the extension passes?

While home prices have managed to drop considerably over the past year, they are expected to drop even further. According to the financial and analysis firm, Fiserv, the overall national median price is forecast to drop by as much as 11.3 percent by June 30, 2010 in 342 out of 381 markets.

Fiserv has been predicting lowered home prices for several years; however, the firm had previously underestimated the rapid decline. Now, economists believe that the firm's predictions are on the mark. According to Moody's Economist.com's chief economist, Mark Zandi, there are definitely more declines to be expected. In fact, in some high-foreclosure markets like Orlando, Florida, the prices are expected to drop 27 percent.

According Zandi, the price drops stem from the foreclosure crisis, which is not close to coming to an end. As more homeowners lose their properties, neighbors lose value in their home, making it difficult to sell at a price anywhere near what they paid.

But of course, the price drops aren't bad news for everyone. Home buyers find themselves on the other end of the spectrum, snatching up deal after deal. These deals are enhanced by being able to take advantage of the Tax Credit for First-Time Home Buyers. Even if they home buyers pays a mere $80,000 for a home, they receive a credit of $8,000.

Buyers in markets like Las Vegas have been taking advantage of the steals. The home prices in this market have already dropped 54.6 percent, and are expected to drop another 23.9 percent by June 30, 2010.

So what do you do if you're looking to sell? Experts encourage holding off for a while until the market bounces back. On the other hand, if you're looking to buy, this is the time to grab a home at an affordable rate. With homes destined to appreciate again at some point, you should be able to take advantage of a great return on your investment.

Are home prices in your market decreasing rapidly?

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