The tax credit for first- time home buyers was extended and expanded in November of 2009. It was extended until the end of April of 2010 and expanded to include existing homeowners starting December 1, 2009. The federal tax credit for first-time buyers is still 10% of the purchase price of the home up to $8,000. A first-time home buyer is defined as someone who has not owned a home for the previous three years. The federal tax credit for existing homeowners looking to buy a new home is 10% of the purchase price up to a maximum of $6,500. An existing homeowner is defined as someone who has owned their home for the last consecutive five years. Because of this tax credit many individuals that were on the fence over whether or not to purchase a new home are now shopping the market. For those individuals looking to purchase a new home, here is some helpful information. Now is a wonderful time to buy a home because of all the choices available. Because of the number of foreclosures and short sales flooding the market, you will never run out of homes. The prices of these homes are affordable, mortgage rates are low and there are often tax advantages available. Home buyers can now deduct the cost of their mortgage loan interest and property taxes. Another wonderful thing about purchasing a home, unlike paying on a rental property, mortgage payments build equity in your home that could appreciate over time. There are risks involved in purchasing a new home. As the housing market has shown us in the last few years, the value of a home doesn’t always rise. Keeping that in mind, if you are unsure about your employment or income, or if you think you might need to move in the next five years, buying a new home now might not be the best choice. Selling a property is time consuming and costly. If you have the means and plan on staying in one area for awhile, now could be a great time to purchase a new home.
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