There has never been a better time to buy a home!
First-time buyers who act now can save $10,000 on their new home in the first year alone.
The first $8,000 is the amount of the tax credit eligible first-time buyers can receive if they get under contract by April 30, and close by June 30.
The other $2,000 comes as a result of the historically low interest rates that are currently available. It is expected that mortgage rates will increase when government support ends in late March, meaning there is an opportunity cost for waiting even an extra couple of weeks.
Consider the impact of rising mortgage rates on a home's affordability. If you buy a home for $300,000 with 10 percent down and a 5 percent 30-year fixed-rate mortgage, you will pay $1,449 per month in principal and interest. If in a few weeks rates go up to 6 percent, the monthly payment would increase to $1,610. The annual savings on mortgage interest is slightly more than $2,000. What's more, the buyer who purchases now will enjoy that same level of savings each year over the course of their 30-year loan.
While the example above applies to first-time buyers, existing homeowners who choose to purchase a new home while the $6,500 tax credit is available can save thousands of dollars, too.
There has never been a better time to buy a home!
Barbara, The low interest rates are attractive but mostly seem to be stimulating the refinance market. As for the $8,000 credit. Wouldn't you agree that it's temporary money. For a person that is currently renting they are free from the burden of property taxes. Once they become a homeowner they accept that burden. In most cases they will use up the $8,000 within 4-5 years after the purchase on the tax burden alone. So is the government really creating homeowners or more tax payers?
Barbara - We just can't tell enough people what a great time it is now to buy, can we? I wish I could shout it at the top of my lungs for all future homeowners to hear.