Does H.R. 2801 Have a Chance? Is it Worth taking the Chance?

Well, this is certainly going to be a closely watched topic over the next couple of months as the deadline for the Federal $8,000 First Time Homebuyer Tax Credit reaches it expiration date.

It seems now that the mainstream media is flirting with prospect of California nearing the bottom of the market.  If this is true, it means it’s going to get tougher and tougher for home buyers to get offers accepted.

It is also widely suspected that the there are many more foreclosures still out there that have yet to hit the open market.

Add to this, the urgency that many buyers are feeling about trying to buy before the Federal Tax Credit expires on November 30th, 2009.  All of this points toward requiring better preparation and much more patience in the home buying process.

Is there a chance that the tax credit will be increased?  Absolutely – H.R. 2801 is in committee now with Congress set to meet again on September 8th.  The proposals made with H.R. 2801 are not new, this is very similar to a Senate bill being discussed in February of this year:

Included in both plans is a tax credit for homebuyers, which is expected to cost taxpayers as much as $39 billion. The House bill allows for a $7,500 tax credit for first-time homebuyers and the Senate bill allows up to $15,000 in tax credits for all homebuyers. Opponents of the tax credit argue that it will do little to decrease high inventory levels because current homeowner’s would have to sell their current home to buy a new one. The Fix Housing First Organization is lobbying to keep the Senate provisions for the $15,000 tax credit, and to ensure that the credit remains available to the taxpayer as a tax refund and is not limited to first-time homebuyers. The organization states that first-time buyers make up only a small percentage of the total market and that including more buyers would enhance the success of the incentive. The Senate has a record of winning negotiations with the House, so the $15,000 refundable tax credit for all homebuyers has a good chance of staying in the final bill.

There is an important point being made in the first sentence of this excerpt…..the tax credit is expected to cost taxpayers as much as $39 billion.  With a current federal deficit nearing 12 Trillion dollars, how much more are taxpayers going to be expected to handle?  How many generations are going to be expected to pay for the spending frenzy that has ensued in an effort to correct this economy?

I am not making any assertions as to whether the tax credit will be extended or not, my personal opinion is that it is extended.  Yes, it will cost billions of dollars but I kind of have a “Well, we’ve gone this far” attitude about the whole thing.  What’s a few billion dollars amongst friends huh?

Ok, there’s the framework for my approach to preparing those of you that want to take advantage of the “bird in hand” and the $8,000 First Time Homebuyer Tax Credit that is available now.  In the upcoming weeks, we will continue to keep you up to date about the progress of H.R. 2801.

If you wish to take advantage of the $8,000 credit you MUST ACT NOW!  It is as difficult as ever to get your offer accepted on a home now, some markets are more difficult than others.

You can expect that it will take at least 60 to 90 days to get an offer accepted if you have less than a 20% down payment.  Buyers making offers on homes using low down payment loan programs are finding it more difficult to get their offer accepted as they compete against all cash investors and buyers with large down payments.

If you have a low down payment, this does not leave you in an impossible position, it may just take more offers before you get one accepted.  All of this basically means that if you want to try to get in under the deadline, you need to get prepared now.

Here is my short list of things you MUST NOT COMPROMISE if you are trying to meet this deadline of November 30th:

• Start interviewing Lenders and Real Estate Agents – This live class is a good place to start – You cannot underestimate the value of hiring the right team.
• Get FULLY APPROVED for your loan now – This is a full underwriting approval from a direct lender (if possible).  Many loan officers out there will give get you pre-qualified putting you in a compromised position when making offers on homes you wish to buy.
• Don’t panic!  You need to maintain an empowered position of being in control of the home buying process.  An implied sense of urgency can compromise your ability to make informed decisions.
• Make educated and informed decisions.  Taking short cuts in the home buying process are costly in terms of stress and increasing the chances of losing your deposit that you’ve saved up for buying your new home.  Remember, your real motivation here is to buy a home for you and your family.  The tax credit is just a bonus.
• Be proactive but not rushed.  Listen, if you start the process now and are able to complete it by November 30th – Great, if not….Do you believe that everything happens for a reason?  I do.
• Be in a position to take advantage of an extension of the tax credit.  If the tax credit is extended, it will take effect immediately.  Even if you’re in the process you may be able to improve your position.
• Be in a position to take advantage of changes in the market.  Home prices have increased for the last 3 months in a row.  If more foreclosures hit the market now, they are likely to sell very quickly because there are more buyers in the market.  Being prepared now may put you in a position to take advantage of “buyer friendly” changes in the market more quickly than other that are waiting on the sidelines waiting for this to happen.

I hope this helps to empower you as a homebuyer, stay tuned for updates on H.R. 2801.  Happy house hunting!

Other articles about this topic that might interest you:

1. HR 2801: Home Ownership Moves the Economy Act of 2009 – Homebuyer Tax Credit Revision We have a little bit more news about the efforts to revise and extend the Homebuyer tax credit.  Let’s take...
2. UPDATE: Homebuyer Tax Credit, Unemployment Bill Advances in Senate So far, I’m not eating any crow.  There have been no reports about changes to the Homebuyer Tax Credit, it...
3. Breaking News: Homebuyer Tax Credit Extended 6 More Months Well, this looks like the news we’ve been waiting on…..all indications are that there is an agreement on extending and...

Tagged as: first time homebuyer, foreclosures, HR 2801, Tax Credits