4 questions on $6,500 Home Tax Credit

If you're grappling with the decision to buy in this market to take advantage of the up to $6500 Federal Tax Credit available to homeowners who've owned their home for 5+ years, then the following 4 questions might help make that decision easier.

1. Are you already in the market?  If you are already considering a move to buy a new primary residence, stay there for 3 years or longer, aren't buy anything over $800k and meet the $125k (single filer)/$225k (joint filers) income limits then this is a great time to 'get in the market'.

2. Do local market conditions look favorable? Three things to consider here 1) Are prices at or near the bottom, 2) Are interest rates still attractive and 3) With the First-Time Buyer Tax Credit, first time buyers are sucking up all the well priced inventory which is good for those looking to sell a property that might appeal to someone like this.

3. Can you sell your house in time?  There is still time though it is quickly running out if you're aim is to attract a First-Time Buyer. They will need to be in contract by April 30th and close by June 30th. Many pockets of the Puget Sound still have over 100 Days on Market Averages. This however is mostly related to homeowners believing their property is worth more than what the market is actually bearing. If you're aggressive with the market (priced 5-10% ahead of current listings) then you give yourself a better chance of selling much faster.

4. Can you close the expense gap? Using the tax credit to help offset closing cost is effective but if you're counting on the tax credit to cushion the higher mortgage cost of your new home, that's a red flag. A job loss could effectively set someone under (much like what has happened the last two years). So see the Tax Credit as the cherry on top and not as the reason you can make the move. Having enough equity in your house will help ensure that you can cover your cost and still have enough left over for a sizable down payment. 

   If time is important, connect with me diego@thecascadeteam.com.