David Kirkpatrick

October 14, 2009

Is the homebuyer tax credit about to get massive expansion?

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 3:41 pm

Expansion to the tune of almost doubling the credit to $15,000 and allowing people other than first-time home buyers into the program. Now that’s some Main Street stimulus, but like “Cash for Clunkers” it’s geared to help one group of industries. Home building and finance in the latest case, automotive in the first case.

From the link:

Congress is considering proposals to greatly expand a soon-to-expire $8,000 tax credit for first-time homebuyers — potentially applying it to all but the wealthiest homebuyers.

Supporters say doing so would further boost home sales, stabilize housing prices and generate jobs. Opponents say extending and expanding the credit would be a waste of money and only temporarily stave off further price declines.

The credit now can be claimed by anyone buying a home who has not owned one for three years and who closes the deal by Nov. 30.

Beyond extending that deadline, some lawmakers want to make the credit available to all homebuyers who meet income eligibility requirements. And some want to increase the amount of the credit from $8,000 to $15,000.

Currently the first-time home buyer credit is available in full to those buying their primary residence who make $75,000 or less ($150,000 for joint filers). A partial credit is available to those making between $75,000 and $95,000 ($150,000 to $170,000 for joint filers).

October 6, 2009

Extending new homebuyers tax credit and COBRA benefits?

Maybe so.

From the link:

The White House is weighing whether to support extending the expiring new homebuyer tax credit and COBRA insurance benefits as part of its review of ways to help the U.S. economy. Gibbs, at a White House press briefing on October 5, took pains not to label these measures as part of a second stimulus package, although he noted that the president’s key economic advisors continue to look at additional options to spur job growth.

Obama, in his weekly address on October 3, said he is working closely with his economic team “to explore additional options to promote job creation.” He repeated his promise to take whatever measures are possible to help job seekers find employment, to open capital and credit markets to businesses and to keep homeowners from losing their homes.

Gibbs said that the White House is working with Congress over legislation to extend unemployment insurance. The House passed the Unemployment Compensation Extension Bill of 2009 (HR 3548) in September and sent it to the Senate on September 22 (TAXDAY, 2009/09/24, C.3). Gibbs said he believes the Senate should be able to act on the bill without further delay, even while health care reform deliberations are in the spotlight. “I think the Senate can do both, and a lot more,” Gibbs stated.

August 17, 2009

Five real estate lies

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 4:41 pm

I’d say this article may currently be a case of good advice coming a bit late in the game, but real estate is cyclical and a new buying frenzy is coming someday. Maybe not anytime too soon, but it is coming.

All five of these falsehoods are worth taking to heart. I’m adding number one to this post because I know a number of people who totally fell into the trap of “I prequalified for this amount and by god I’m buying a house for that amount.” Those people now? Not feeling so good about pushing the top edge of their purchase time financial clout.

From the link:

1. Buy as much home as you can afford. Even after the breathtaking three-year decline in home prices, I still hear this mantra over and over. This line from a well-known TV realtor continues to ring in my head: “You qualified for a $295,000 mortgage and you should spend that.” When the budding buyer protests, the realtor responds with a curt, “You can’t get what you want for less.”

The home shopper is worried about going too deep into debt and the realtor wants her to party like its 2005. And we know all know how long that hangover’s lasted.

Here are the two reasons NOT to buy too much house. You could lose an amount of money that you cannot afford to lose. Yes, home prices can decline. Because homes are bought with large amounts of leverage, a small decline can wipe out your entire investment and then some. In buying too much house, that loss will be too great as a percentage of your income and savings.

Two, the minute your income declines you bought MORE house than you can afford. As soon as someone takes a 20% hit to their pay (easy if you’re in a commission-based job) or suffers a job loss, that house payment becomes beyond your means.

The basic concept of buying a modest home over renting is sound because of the forced savings. But overreaching and buying too much house is not wise. A bigger home is not a better investment.

January 29, 2009

Stimulus package throws first-time home buyers a bone

Filed under: Business, Politics — Tags: , , , — David Kirkpatrick @ 5:41 pm

A pretty good bone at that.

From the link:

If you’re thinking of buying a home, there could be a big bonus for you in the economic stimulus bill that’s now before Congress.

Among its many provisions is a $7,500 tax credit for first time home buyers. The House passed the $819 billion stimulus plan, including this tax credit, in a vote late Wednesday. The Senate may vote on its version of the bill some time next week.

Technically, the stimulus bill is actually changing the terms of the $7,500 tax credit that was issued as a part of the Housing Recovery Act, which Congress passed last summer. That legislation required that the tax credit be repaid over 15 years, making it more of a no-interest loan. Not surprisingly, the measure had little impact on the market. The stimulus bill now under consideration would make that tax credit a true credit that doesn’t need to be repaid.