Reconfigured home buyer tax credit

OK, here's the latest iteration of the first-time home buyer tax credit extension, agreed to (or so some say) Wednesday evening by the Senate leadership and the sponsors of various proposals.

The $8,000 credit would continue for first-time buyers.

A reduced credit of up to $6,500 would be available to repeat buyers who have owned their current homes for at least five years.

Both credits would be available to home buyers who sign sales agreements by the end of April 2010.

Prospective homeowners then would have until the end of June to close on the properties.

Senators still hope to attach the home buying credit extension/expansion to its unemployment insurance benefits bill. A vote on the measure, and the home buyer tax break amendment, could come Thursday.

Or lawmakers could continue to bicker over arcane procedural rules and partisan amendments on other issues. Stay tuned.

When the Senate does pass its unemployment benefits bill, it will have to be reconciled with the House's version approved last month. The House bill does not contain any home buyer tax provisions.

And the White House has expressed a preference to limit any continuation of the credit to first-time buyers only.

As I said, stay tuned. This tax break, currently set to expire on Nov. 30, is likely to have a different look before all is said and done.

My concern is that if people need the credit to get into a first home or move up to a larger one, are they getting in over their heads in debt? And isn't that what got us into the economic trouble we're in now?

Is it worth it? The real estate industry continues to shout about tout how much the credit has helped boost that sector.

Many folks, however, are concerned about the credit's long-term cost.

And one economist says that regardless of what legislation is or isn't passed to encourage home purchases, recent home prices may not be sustainable.

Robert Shiller, an economics professor at Yale and
co-developer of Standard and Poor's S&P/Case-Shiller Home Price
Indices, told Reuters Television he is concerned about the
pace of home price increases.

In some areas, said Shiller, home prices appear to be in "bubble
territory."

Not exactly what any of us wants to hear right now.

First-time owner tips: If you are a new homeowner, or are considering buying your first residence, check out MintLife blog's mistakes to avoid.

As you might suspect, the one that caught my eye is overestimating the tax savings. Yes, the mortgage interest and property tax payments are nice deductions, but don't let taxes be the main reason for buying a house.

Related posts:

• Extend home buyer credit, but cut it
• H.R. 3901 aims to halt home buyer fraud
• $10 billion paid out in home buyer claims,
  but how many were bogus?
• Home buyer credit crystal ball gazing