Will the FHA Suffer From Homebuyer Tax Credit?
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The homebuyer tax credit was just extended. You know, the $8000 tax credit given to first time buyers to help them get into a home? Well, with the extension came looser guidelines. It raises the maximum income to $225,000 and applies to people who have owned a home for at least 5 years as well as first-time homebuyers.
However you feel about tax credit from a fiscal standpoint or a policy standpoint, the fact is that homebuyers can get into an FHA insured home with no money out of pocket. The FHA offers a 3.5% down program, for a modest home purchase, would be more than covered by the tax credit.
That sounds nice until you look at the fact that homebuyers with no money out of pocket are far more likely to default than are homebuyers with skin in the game. It is common sense and the numbers support it. Should I also mention, again, that the FHA is already buried and there are a lot of people concerned for the agency’s future.
I could also bring up the fraud in the program and the new expanded guidelines are not likely to improve that situation. Between the raging failure called Cash for Clunkers and now this you have to ask yourself, what are these people thinking…
Source: Homebuyer Tax Credits Threaten the FHA (online.wsj.com)
Related articles
- First-time homebuyers tax credit: Should Congress end it or extend it? (dailyfinance.com)
- Senate OKs home buyer credit extension (dontmesswithtaxes.typepad.com)
- You Don’t Have To Be A First Time Homeowner To Receive The Tax Credit (zillow.com)
