I’ve had borrowers break down in tears crying in my office when they learn that they can’t buy a house prior to the $8k expiring due to qualifying issues… I’ve also had a few borrowers pissed off when they realize they never qualified for the credit because they made too much money in our government’s eyes.

I don’t think anyone should buy a home just because of the tax credit.

But people are, aren’t they?

I can’t wait for it to expire, and in the market segment I’m looking at, the 8k is 4% of the purchase price. The credit has totally skewed the market at the bottom end. I’m actually seeing new listings coming on with an asking price greater than 2008 tax valuations. Are these people serious?

The sooner it expires, and housing can correct in a [more] rational market, the better. I know I qualify for the credit. I just don’t care.

I don’t think anyone should buy a home just because of the tax credit.

RE: Mike2 @ 15 –

HIghly disagree with penalizing poeople for looking out for themselves. Everyone has a different situation.

This isn’t just “people looking out for themselves”, it’s people not taking responsibility for their own poor decisions or the unplanned consequences.

Do you really advocate a system where people buy things on credit and then decide “well, I’m not really happy with this car, boat, television, dinner, education, etc… so I’m not going to bother paying for it”?

Adverse life events that affect ability to pay are another story. People deciding not to pay are acting in bad faith, which is far different from a borrower that breaks his leg and can’t work.

Credit scores are meant to predict whether people will pay a debt. Ruthless defaults demonstrate otherwise, and scoring should reflect this.

And there should also be exceptions the other way (penalizing them further), such as where the default is intentional, but that would be very difficult to determine. Rather than using the sudden termination of payments method used by those conducting worthless studies, I’d perhaps look for only the home loan going into default, and no other defaults. That would be a good sign of a strategic default, especially if they did have significant unsecured debt.

HIghly disagree with penalizing poeople for looking out for themselves. Everyone has a different situation.

Dropping strategic defaulters credit scores to 0 would certainly remove some of the incentive.

I find this simply inexcusable and quite shocking! Who would have guessed it?

psst……………….people are not stupid……………………..They are all coming back………..maybe not this year or next………………………but in the end they all come back……..

Rather unlikely that someone purchasing an 800k home would be a first time buyer. The people selling such a house would be more likely to be selling to someone, who sold to someone, who sold to someone who was a first time buyer.

In the areas where the FHA limit is $729,950, it’s certainly possible. There was a story about a couple in LA that bought a home in the $750K range and took advantage of the $8K credit. An AGI of $150K works out to a gross income of over $200K if the buyer takes all available deductions. I doubt many of the people taking advantage of the credit fall into this category, but nothing prevents it.

“NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit.”

http://www.latimes.com/classified/realestate/news/la-fi-harney20-2009sep20,0,2560658.story

RE: Flying Ape @ 2 –
I’m With You Flying Ape

Even Suzy Orman considers stealing from retirements to pay off mortgage debt is ludicrous, especially if the loan is upside down…..if you you go bankrupt you can keep a 401K, but not if you used it for interest payments. She recommends just go bankrupt and keep your 401Ks.

Well that’s a no-brainer. Unfortunately, most people don’t see a bankruptcy attorney early enough to know what to do, or what not to do.

Of course the $4,500 incentive under CFC was about 25% of the retail price of my new car. I’d probably suggest a qualified home buyer seriously consider buying if he could get the government to subsidize the purchase by 25%. The first-time home buyer credit cap is 10% of the purchase price.

Future positive equity is one thing, but a positive present value on the future positive equity is yet another.

Retirement comes faster than you think and try paying for the hamburgers with home equity…LOL….especially when home equity wealth is crashing. Even Suzy Orman considers stealing from retirements to pay off mortgage debt is ludicrous, especially if the loan is upside down…..if you you go bankrupt you can keep a 401K, but not if you used it for interest payments. She recommends just go bankrupt and keep your 401Ks.

When I see new $800k homes on the Eastside I wonder how changing the price 1% affects anything in a real way.

Rather unlikely that someone purchasing an 800k home would be a first time buyer. The people selling such a house would be more likely to be selling to someone, who sold to someone, who sold to someone who was a first time buyer.

I think that the $8k credit is meant to push people over the line who are thinking about it but not 100% sold on the idea.

When I see new $800k homes on the Eastside I wonder how changing the price 1% affects anything in a real way.