Perfect time to go from renter to owner?

[lbadragan]

I think so. My offer of $115,000 on a foreclosure was accepted yesterday. The property sold in 2005 for $275,000 before improvements were made to it. Even though real prices will probably continue to decline, the high inflation I expect makes this a no-brainer for me. As inflation ravages the dollar in the coming years, I expect to be able to pay down the house quickly while rent prices go thru the roof. That $8,000 check I'll be getting at tax-time for being a first time home-buyer is not too shabby either.

Be fearful when others are greedy and greedy when others are fearful.

What do you guys think?

 

[Johnnybags]

If you have a stable job

I think so. My offer of $115,000 on a foreclosure was accepted yesterday. The property sold in 2005 for $275,000 before improvements were made to it. Even though real prices will probably continue to decline, the high inflation I expect makes this a no-brainer for me. As inflation ravages the dollar in the coming years, I expect to be able to pay down the house quickly while rent prices go thru the roof. That $8,000 check I'll be getting at tax-time for being a first time home-buyer is not too shabby either.

Be fearful when others are greedy and greedy when others are fearful.

What do you guys think?

and the town its in does not raise taxes to the moon, fine and dandy. But the inflation we will get will not be wage inflation for some time. It will be necessity inflation and until the job market sops up the unemployed(years and years away) wages will stagnate. If you plan to stay for a long time, all is well, its better than rent.

 

[Cowlesy]

I think it was a smart move, though I do expect housing prices to continue the decline.

If you purchased the house to live in, I think you made a wise decision.

Congratulations!

 

[lbadragan]

I'm purchasing for the very long-term. I don't plan on selling even if I eventually move years down the road. If I do eventually move, I'll keep it as a rental. It's in a nice, safe area, accesible to public transportation, and close to lots of jobs.

 

[Josh_LA]

for some people, YES.

if you're in the right foreclosure area with auctions, go for it (but who knows, could get better!)

 

[IChooseLiberty]

FYI, You wont be getting an $8,000 boost to your tax return. It'll be more like $2,500.

 

[Chase]

Glenn Beck had some things to say about housing prices:

http://www.youtube.com/watch?v=ca_aOvZPh-g

 

[Josh_LA]

FYI, You wont be getting an $8,000 boost to your tax return. It'll be more like $2,500.

don't count eggs before hatched

 

[lbadragan]

FYI, You wont be getting an $8,000 boost to your tax return. It'll be more like $2,500.

How do you figure? I've read in several publications that the credit is refundable. So if my tax liability is $5,000 and my tax withholding for the year was $3,000, I will get a check for $6,000. You're saying it doesn't work like that?

 

[enjerth]

I'm making the move to becoming a homeowner.

If the TPTB have any inclination of saving the US dollar, rates will soon be going up dramatically. If they don't intend on saving the dollar, we'll see enough inflation I may be able to pay it off in a few weeks if have a good income that doesn't lag too far behind inflation. Even then, I may be able to make the payment with 1 or 2 pieces of silver per month.

 

[homah]

FYI, You wont be getting an $8,000 boost to your tax return. It'll be more like $2,500.

Why not? Isn't it $8000 or 10% of purchase price, whichever is less? He should be getting the max as far as I know.

 

[homah]

How do you figure? I've read in several publications that the credit is refundable. So if my tax liability is $5,000 and my tax withholding for the year was $3,000, I will get a check for $6,000. You're saying it doesn't work like that?

I believe this is correct. At least that is how it worked for the $7500 repayable credit.

 

[lbadragan]

If the TPTB have any inclination of saving the US dollar, rates will soon be going up dramatically. If they don't intend on saving the dollar, we'll see enough inflation I may be able to pay it off in a few weeks if have a good income that doesn't lag too far behind inflation. Even then, I may be able to make the payment with 1 or 2 pieces of silver per month.

I don't think there's even a chance they'll hike rates as that would have the exact opposite effect of what they've been trying to do and it would completely crash the real estate market. High inflation is almost guaranteed.

 

[angelatc]

Interest rates are probably going to go up at some point too. If you're living there I think it's a great deal.

Congrats!

 

[robert4rp08]

Nice find! I'm saving my butt off so that I can jump on a deal like that should one come up.

 

[IChooseLiberty]

How do you figure? I've read in several publications that the credit is refundable. So if my tax liability is $5,000 and my tax withholding for the year was $3,000, I will get a check for $6,000. You're saying it doesn't work like that?

No way. It's a tax credit which means you can use it as an additional deduction in addition to a standard deduction or itemized deductions that you take on your tax return. This works to lower your taxable income thus lowering the amount of tax you have to pay.

Essentially it will reduce your tax liability by the credit amount multiplied by your effective taxable rate.

 

[lbadragan]

No way. It's a tax credit which means you can use it as an additional deduction in addition to a standard deduction or itemized deductions that you take on your tax return. This works to lower your taxable income thus lowering the amount of tax you have to pay.

Essentially it will reduce your tax liability by the credit amount multiplied by your effective taxable rate.

Yes way!

From the National Association of Home Builders:

the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

From CNNMoney.com:

A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:

"I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?"

The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid. The long answer? It depends. Here are three scenarios:

Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.

Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.

Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.

 

[IChooseLiberty]

Yes way!

From the National Association of Home Builders:

From CNNMoney.com:

Oh damn. Well that changes everything. Looks like I'm buying before the end of the year Thanks for the info.

 

[s35wf]

if you have a stable income, are buying to live in, and for long term, as u stated you are then its a great time to buy. prices are down, interest rates are down, and yes the 8K first time home buyer incentive definitely helps. Congrats!

wish you were in FL so i could assist you with your lending options.
Enjoy your new home.

 

[Zippyjuan]

If you can afford it (including your property taxes and other expenses), intend to stay in it for a while, and lock in a fixed rate loan I say go for it. Interest rates are at a historically low point these days so the most likely direction they will eventually take is up. I am glad I bought when I did because my payments are lower than renting a comparable home in my area and this will not go up (the property taxes may). Congrats.