Reasons Abound for Buying a Home Even Without the Tax Credit

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Mortgage / Finance, Real Estate

There are still plenty of reasons to buy a home even if the tax credit program has ended.The still low mortgage rates and the lower prices of homes compared to price levels a few years ago are more than enough to compensate for the loss of the tax benefit. Besides, a good number of home builders and sellers have been offering discounts and incentives to replace the tax credit scheme.

The average rate for 30-year fixed-rate mortgage loans has hovered near 5 percent over the past several weeks, and this week, it has plunged to 4.78 percent, very close to the record low rate of 4.71 percent reached late last year.However, this low mortgage rate can spring back up again to 5 percent or possibly even surpass it if the cause of the sudden rate drop is resolved and the market returns to its road to recovery. Economists working for the National Association of Home Builders said that as foreclosures continue to slow down and get absorbed by the market, home prices are expected to begin rising next year. Many markets, particularly cities with stronger economies, have even started posting significant price increases last month.

For a 30-year fixed rate loan of $150,000 with a mortgage rate of 4.5 percent, the monthly principal and interest payment would be around $760. If the rate goes up to 7 percent, the monthly payment would be around $948, a difference of $188. If taxes, insurance and other fees are added, then the difference would be bigger. Indeed, taking advantage of lower mortgage rates means substantially lower monthly payments.

Home buyers can also begin enjoying new features added to new homes by builders today. Compared to newly-built homes one generation ago, new homes now are far more energy-efficient and easier to maintain and improve. With builders considering modern lifestyles and higher energy costs, new homes now offer flexible spaces, open floor plans, better safety features and energy-efficient low-maintenance materials.

The Housing and Urban Development Department and Federal Housing Authority have also been doing their share to help home buyers. Rules that are curtailing home buying such as anti-flipping and condo buying restrictions have been relaxed to enable more people to own a home. FHA has also been calling on private mortgage lenders to consider providing home loans to qualified borrowers who cannot make the 20-percent down payment requirement.

The benefits of home ownership over the years are also still in place for buyers today. Homeowners can still claim mortgage interest and real estate tax deductions and married couples can still exclude profits of up to $500,000 from capital gains tax if they sell their principal homes.Lastly, there are other benefits of homeownership that cannot be valued in monetary terms such as family well-being, personal satisfaction and community growth.

May 30th, 2010