FOR THE 1ST TIME HOMEBUYER: A Tale of Two Credits

Raising home foreclosures, falling home values, restrictive and ever tightening mortgage guidelines and a scarcity of Credit compounded the real estate marketplace. Buyers weren't buying and Sellers couldn't sell.

And prices kept falling as the spreading foreclosure epidemic continued its monthly regurgitation of even more homes onto the already saturated marketplace. Yet the bargain hunters were out and about - even too, home buyers seeking to take advantage where an opportunity might exist.
Credit #1

In the waning days (months maybe?) of the Bush Administration, under public pressure to do something the Congress and the White House agreed to a package which included a Credit that would encourage new first time home buyers to go out and buy homes. This was an attempt to reduce the amount of homes that remained on the market depressing home values in the marketplace.

The Housing and Economic Recovery Act of 2008 provided certain incentives for home buyers to get out and start buying homes, among which was a interest free tax credit of $7,500 repayable over 15 years on their tax returns. The home buyer, however, must among other things, be a first time home buyer, and must live the the home for a minimum of 3 years as their primary residence. They also needed to complete their purchase after April 8, 2008 and before January 1, 2009.

Credit #2

In the rising days, literally, of the Obama Administration, The American Recovery and Reinvestment Act of 2009 was passed with a stimulus package providing first time home buyers a credit of $8,000 - this needs not be repaid as long as the home buyer remains in the home for at least 3 years - here, there are also stipulations that needs to be met, similar to the Bush plan.

Caught in the middle of of these two Credits, homeowners who bought before January 1, 2009 are somewhat frustrated that they need to repay their "loan" while those who qualify under the Obama plan, get not only a credit of $500 more, but they wont have to repay it as long as they abide by the stimulus guidelines. Many are hoping that there may be a relaxing of the rules, or new legislation that will give them the same benefits as the more recent stimulus package, but that does not seem likely.