Inland Empire California Home buyers who were frantically making offers on homes but missed the $8,000 federal home buyer tax credit deadline on April 30 may be happy they did miss it.
Why? Because if they are still in the market to purchase a home, they could end up saving much more than $8,000 they received from the government.
How is that possible? Two reasons.
1. Interest rates have dropped about .5% since the first quarter of 2010. Assuming home prices are the same, on a $200,000 loan with a .5% lower rate, a homeowner would save about $21,544. That’s $13,544 more they would save by waiting to purchase now after the tax credit. Ok ok, no one keeps one loan for 30 years. If they just keep the loan for a more reasonable 12 years, they would have broken even.
2. The second reason is that home prices seem to have dropped, or at least stayed the same due to so many fewer buyers making offers. If home prices haven’t dropped, then there seems to be more credits being offered by the sellers and/or builders to attract buyers. I know for a fact that most homes are no longer receiving 20-30 offers with-in the first several days of being on the market for sale. Homes that were not offering seller credits are now starting to concede 3% (or more) to the buyers closing costs. This could be an additional $5,000 to $$8,000 savings buyer may see due to waiting to purchase after the tax credit.
Moral of the story? I was thinking of several buyers who gave up on home ownership because they didn’t get an offer accepted prior to the $8,000 federal tax credit. They acted as if the world was coming to an end because of of an opportunity that was perceived as being one you can’t miss. Just because you think you are missing out on an opportunity doesn’t always mean something better won’t come along, or what you just missed was actually an opportunity. The saying ‘when one door closes, another door opens’ is very applicable in this situation.
So now what? Interest rates are low, some homes are dropping in value, or at least staying stable, and the odds of negotiating a seller credit may be even greater. If you want to own your own home, this seems to be an even better time to buy then when the government was paying people $8,000! So take action now and be thankful you missed the tax credit. Opportunity may be knocking again and the door may be even bigger this time
Other Article you may be interested in reading: What is the Biggest Benefit or Reason for Buying Home?
[…] What could be better than the $10,000 state tax credit? After the tax credit expired, it seemed like many people were depressed or frustrated they were unable to purchase a home and receive the state or federal tax credit I wrote a post that everyone should read, Did You Miss $8,000 Tax Credit? Be Glad You Did. […]