 Things are often more complicated than they seem. For example, an article I read today suggests that homebuyers who missed the federal homebuyer tax-credit deadline may actually save money.
How’s that? Well, interest rates are lower now than just before the deadline. So in the article’s hypothetical example of a $350,000 home and a $70,000 downpayment, the homebuyer realizes $1,467 in annual savings because of today’s lower mortgage rates. Total savings over 30 years is $44,003 … significantly more than the $8,000 first-time homebuyer credit or the $6,500 that was available to existing homeowners. Like I said, though, it’s not that simple. First, lots of people don’t pay $350,000 for a house. The median Texas home price is less than $150,000. It’s also common for a homeowner to sell long before paying off that 30-year mortgage. The median length of homeownership is seven years in our state. So if the article instead focused on a lower-priced home and its smaller annual savings due to lower interest rates … and fewer years owning the home … the savings from that hypothetical example start to look hypothetical indeed. | Any savings also depends on your exact mortgage rate. Rates change more frequently than every month. In fact, they can vary during a day. Also, raters have been under 5% for several stretches since the tax credit began. These variables make a comparison muddier than the article suggests. This much is clear to me, though: Interest rates are incredibly low. When I purchased my first home, my loan carried a rate nearly double today’s rates. Also, just because the federal tax credit has passed doesn’t mean there’s no assistance available. You can search TxHomePrograms.org to see if there’s a program you qualify for. I could create hypothetical scenarios where a homebuyer’s savings now totaled a few bucks more or a fistful of dollars less than when the tax credit was in place. The point is that it depends on many factors. It was a good time to buy a home before the tax credit, and it’s a good time to buy a home now … if it’s a good time for you based on your personal situation. |