Today's complaint (gee, that never happens) is about the modified First-Time Homebuyer Tax Credit which is part of the much besieged American Recovery and Reinvestment Act. Let me start of by saying I applaud the efforts by President Obama and Congress to get something to the American people that will help us get out of this economic crisis. The speed that this bill got passed is amazing considering the amount of money that it contained. I guess when you are a president and you are a Democrat, it sure helps when you are wanting to pass a bill that the majority of Congress are Democrats as well!
Now we can debate all day on what this stimulus bill contains is really going to help our economy. Experts on both sides can give you reasons why it will work or why it will fail. (does that make you feel uneasy? It does me.) I like the one comment by an economy expert who said this bill is like shooting a basketball and not knowing if you made the basket until 6 to 12 months later. How crazy is that?
But I think that most people, like myself, believe we have to do something because doing nothing will cause this recession to surely last longer than we want it to. I have to believe that there are some good things about the stimulus package as well as some bad things. So we have to live with that.
But the First-Time Homebuyers Tax Credit is both good and bad from my point of view.
Why is it good? Well first of all, it a great incentive for first time homebuyers, especially those sitting on the fence deciding if they should buy or not. (Hint: Buy, Buy, Buy!) What a nice thing to get: A credit up to $8000 after buying a house. Most first time homebuyers don't have a lot of cash to work with. So this credit will help with buying furniture, appliances, etc. Or maybe fixing up the house because most first time homebuyers are buying exactly that: a fixer upper. Or the most common payback, paying back mom & dad for lending them the money to buy the house in the first place.
And since I believe that the root of all evil in this recession started with the housing industry, any plan that can help boost home sales is fine by me. This new tax credit doesn't have to be paid back like the previous version and they have extended the tax credit program another 4 months.
So you ask "Dan, why are you having problems with this?".
Why limit this program to first time home owners? Why can't anyone who is buying a primary residence get this credit. Maybe someone selling their home at a loss because home values have gone down so much would feel better knowing that by buying a house they might be able recoup some of the losses on the sale of their house knowing they will get some of that lost money back when buying a new house.
And why limit it to $8000? Why not give the 10% to a buyer no matter what the sale price is? (I suppose you would have to limit it to a reasonable amount.) Isn't the idea here to get people to buy homes? And when buying homes, doesn't that reduce the inventory of homes for sale? And when the inventory of homes is reduced, doesn't that raise home values? And when home values are increased, doesn't that increase property taxes? And isn't better for government to collect taxes and have a surplus of cash instead of having to cut city services?
Do I have to go further?
It's all theory. I get that. But to me, whatever we need to do to kick start the housing market, we need to do. Because people need to be able to buy and sell homes when they want to. If they need to unload a house for whatever reason, that opportunity should be there.
We have seen what happens when it's not.
And now we are using the word "foreclosure" way too much now.
Let's slow down the usage.
If you have any comments on this article, I would love to hear what you have to say!
Feel free to comment below.Thanks for reading!
Dan Tenchall
Great Lakes Mortgage Funding
For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!
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(586) 532-0600
dan@glmf.com
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