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Rick Hubbert
Senior Mortgage Consultant
On Q Financial
WA Lic. 510-LO-37044
425-643-7000 PhoneUS Senators Near Deal On Extending Home Buyer Tax Credit

By Jessica Holzer, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- U.S.Senators are nearing a deal on a measure to extend the first-time home buyer tax credit through next April and expand it to some buyers who already own a home.

Under the deal, certain "step up" buyers who have lived in their current home for at least five years would also qualify for the tax credit, according to lobbyists close to the negotiations.

The deal comes amid heavy housing industry pressure to extend the tax credit, which is set to expire Dec. 1 unless Congress acts. The measure, which proponents hope to offer as an amendment to legislation extending jobless benefits, could receive a Senate vote this week.

Under the measure, the credit would run through April 30 of next year, though sales contracts in force by that date would be eligible as long as the deal closes within 60 days. The credit would amount to 10% of the sales price, with a maximum of $7,290. The current credit has a cap of $8,000.

To qualify, first-time home buyers must make no more than $75,000 a year or $ 150,000 for couples. For step up borrowers, the income caps are $125,000 for individuals and $250,000 for couples.

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So, it looks to me like it might be a good time to start thinking about a move up if you've been in your home for 5 or more years, or selling that home in the $400,000-$700,000 range to a move up buyer.

An Associated Press article from Friday points out what most homeowners already know - it still generally pays to own a home.

Even though prices are down significantly from the peak, they're still worth quite a bit more than they were a decade ago. In Seattle, the median home price is hovering at around $400,000 - compared to $237,500 in 1999.

While that may not seem like such a big gain, consider that the average homebuyer, then as now, typically buys with a five- or ten-percent down payment. So that initial investment, $12,000 down back in 1999, returned about $160,000 or so over ten years, more than ten times the initial investment. (As the AP article points out, that's a one-thousand percent increase!)

Even with 20% down, it's a return that exceeds 250%, 'way better than inflation.

The stock market? Well, in October 1999, the Dow was at 10,649. Yesterday, it closed at 9864. So the ten year gain there was ... negative.

Of course, we don't buy our homes just for the investment potential. Still, for the majority of homeowners who have been able to weather the bad times, real estate ownership has proven to be a pretty good investment. To quote the AP article again, with prices already having fallen so far, buying now could make it an even better one.