If you’ve been paying attention, you know that the Federal Government offered a $7500 income tax credit to first time home buyers (http://www.irs.gov/taxtopics/tc611.html) who purchased homes in 2008.  Of course, like any government program, there were exceptions (you can’t make too much money, you greedy #$&%!) and unlike other “credits” this one had to be paid back.  The pay back can be over 15 years and is interest free, so it’s essentially an interest free loan – still a pretty good deal.

Well, in 2009 the deal is even better because it’s now an $8000 (real) credit and you don’t have to pay it back (http://www.irs.gov/taxtopics/tc612.html).  You must purchase the house after December 31, 2008, and before December 1, 2009 and keep it for at least 36 months to qualify for the credit.  And for those of you that purchased a home early in 2009 and claimed the $7500 “non-credit credit” – EUREKA! You can file an amended return and get the $8000 non-refundable credit.  For some FAQ’s on this subject check out http://www.irs.gov/newsroom/article/0,,id=206293,00.html.

With the housing market still not out of the woods, this alone wouldn’t necessarily tempt me to buy at this time.  However, I just don’t believe interest rates are going to stay this low very much longer.

Since 1992 rates for a 30 year fixed mortgage have ranged from a high of 9.2% to a very recent low of just under 4.8% *. During the late 70′s and early 80′s, a time of rampant inflation, mortgage rates peaked above 18% *. With Uncle Sam spending money like a drunken sailor (no offense to our men and women in uniform), inflation and interest rates are going to soar. Unless, of course, Washington and the Fed…  Ok, this isn’t a fantasy blog; my opinion – buy now.

* Source:  Federal Home Loan Mortgage Corporation’s (Freddie Mac) Weekly Primary Mortgage Market Survey (PMMS)