First Time Homebuyers Tax Credit Coming to an End

Homebuyers who plan to take advantage of the federal government's $8,000 tax credit extension had better act fast. In order to qualify, you and the realtor must sign the purchasing contract by April 30, and the actual closing must occur by the end of June. If you want to beat the rush, block out plenty of time (around filing for taxes, of course) so that you can make your final decision with time to spare.

This tax credit primarily applies to "first time buyers", or home buyers who have not owned a home in the past three years. The legislative changes made in November 2009 extend a similar tax credit to "long-time repeat buyers", or homeowners who have lived in their primary residence for a consecutive five years out of the last eight-year period.

Now how much is this credit for? It covers either 10% of the home's purchase price or $8,000—whichever is less. This figure is for first time homebuyers; for longtime buyers the maximum tax credit is $6,500. This tax credit does not need to be repaid as long as it remains your primary residence for at least three years. For more information, see: http://www.federalhousingtaxcredit.com/

There are more reasons to buy a home in the Dallas-Fort Worth area. Mortgage rates are at all time lows, according to Freddie Mac, but they are poised to rise; predictions range from below 5% to up to 6% by the end of the year. The factors involved in this change are many: a climate of rising interest rates in general, the Fed backing off its securities manipulations that have been keeping mortgage rates low. 

Housing prices in Texas are up as well: according to a December S&P/Case-Shiller report, Dallas home prices have appreciated 3% over the past year. This compares favorably to most other housing markets in the United States, many of which have seen more modest gains or even losses. These marked differences in price gains make it appear as if the national housing market is still struggling, if one relies on the law of averages. Still, housing prices are driven by many factors, including local effects such as the strength of the local economy and unemployment rates. With Dallas unemployment 1.5% below the national average, its housing market is likely to rebound as well, resulting in a price spike and an additional increase in mortgage rates due to greater demand.

Between these factors and the last-minute rush on purchasing under the tax credit, now is the time for first time homebuyers to act.