Source: Craig’s shelter in solo isolation in the jungle

In the early 2000’s, the housing market was doing well and most people who bought a home during this time believed that their homes would be an investment. They assumed they would have a home that would appreciate. Unfortunately though, that was not and has not been the case. More and more homeowners who bought homes in the early part of this decade are finding that their homes are depreciating. Now they are finding it hard to find buyers for their homes.

With that thought in mind, it might be wise to be on the side of caution when considering buying a home. The first thing you might want to consider is how good your credit is. If you have bad credit, it would be in your favor to consider renting instead of buying, especially during a time with so much economic upheaval.

A lot of those owners who now are finding it difficult to sell their homes are willing to rent a home for a $1,000 a month that was worth over $250,000 when they purchased it. In this day and age, $1,000 a month is a far cry from the house payments and interest you would have to pay if you were to buy a home. Not to mention the large down payment that you would need up front to buy a home. You can get rental deals from homeowners that are finding it a difficult selling market and are at least wanting some income from their property.

These days, there are a lot of different benefits from renting instead of buying. You don’t have to pay interest, you don’t have to pay taxes, and it should give you the ability to be able to save money for the future, should the opportunity come up to buy a home in perhaps a better housing market in the future.

Another advantage to renting in this days market is the fact that you’re not going to run into any unexpected expenses forcing you to dig into any reserve funds that you might have. Remember once the monthly rent is paid, all obligations for repairs and maintenance is the sole responsibility of the owner of the property.

On the other hand, if you have very good credit, there would probably be an advantage to buying a home right now. The reason for this would be the fact that going prices on homes right now are much lower than they were a few years. The major advantage for those with good credit to own a home instead of renting is the fact that their monthly payment is an investment and not being thrown away as it is in renting a home. The homeowner also has the benefit that their monthly payments will not increase over the years, whereas the renter can probably expect an annual increase of 5%.

In the end, whether or not you buy or rent, will mainly depend upon just how good your credit is and whether or not you feel secure that your income, where it stands at the time of purchase, will remain the same for quite some time to come.

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If you are looking to buy a home in the near future, there are tax credits that have been set up by the government that you might be eligible for. There are two different types that began in 2009 by the government and their amounts depend upon whether you are a first time home buyer or a repeat home buyer. For the qualified first time home buyer, the tax credit given would be around $8,000 and for the qualified repeat home buyer, the tax credit is around $6,500.

For the person who is a qualified first time home buyer, any purchases of homes between January 1^st, 2009 through April 30^th, 2010 can be eligible. Should a pending sale be signed for on April 30^th of 2010, they will have until June 30^th, 2010 to be considered for the tax credit.

For anyone who purchases a home after November 6^th, 2009 will have income limits set upon them at $125,000 per year for a single income and $225,000 for married couples filing jointly. Anyone who is trying to purchase a home whether it’s a new home or a resale home are eligible for the $8,000 tax credit. Those who are claimed as dependents or are 18 years or younger are not eligible.

What makes a person a first time home buyer? If they have not owned a residence three years prior to the current home that they are thinking of purchasing, qualifies them as a first time buyer. For a married couple it must mean neither one of them has owned a home the previous three years. Owning a vacation home, does not qualify as a principle residence so would not count against the first time buyer regulations.

The tax credit that is given to the buyer by the government is figured by estimating 10% of the home’s purchase price or the maximum amount of $8,000.

A repeat home buyer is one that already owns or has owned a home within the three years of purchasing their second home. Anyone who is a qualified buyer and wants to purchase a second home is qualified for the $6,500 homebuyer tax credit.

The credit is determined the same way as with the first time buyer, 10% of the purchase value of the home, or a maximum of $6,500. The income limits are also the same. Single home buyer’s income limit being $125,000 and married filing jointly would be $225,000. Any more than that and they do not qualify.

The way that a person files for their home buyer tax credit is by using their federal income tax return. Homeowners should complete the IRS Form 5405 in order to figure out what their tax credit will be, and then they would claim this amount on line 67 of their income tax form for 2009.

There isn’t much more to it than that. No applications will be required from the home buyer nor is there a pre-approval necessary. The homeowners though, must pass the tax credit tests and income limits. One cannot request a tax credit from a future purchase though; it must be for a home that has already been purchased.

The dwindling condition of the real estate market hasn’t turned around as of yet. More and more people are trying to prevent their homes from foreclosure. As such, the number of refinance applications has increased in numbers. The severity of the real estate crisis can be ascertained as the government stepped in with the mortgage bailout plan to rescue the real estate market in United States.  

If you are planning to refinance your existing mortgage, it is important to find out whether refinancing will help you save some cash. You should find out the amount you are saving by refinancing exceeds the fees you shell out for refinancing. You refinance your existing mortgage when you take out another loan using the same property so that you can pay back the first loan. In case you have been paying a higher rate of interest and you happen to refinance your existing mortgage, you can opt for an interest rate that is lower. This makes your payments more affordable.  

What are the benefits of refinancing?

If you refinance your mortgage loan, you can also decrease the loan term. If you decrease the loan term but continue to pay the same amount every month, you not only make payments for the interest rate, but also for the principal amount. In this way, equity builds up in your property.  

If you availed an adjustable-rate mortgage or ARM when you applied for a mortgage loan, you can switch over to fixed-rate mortgage or FRM. Opting for fixed-rate mortgage makes your monthly mortgage payments predictable but if you are making payments as per an adjustable-rate mortgage, your monthly mortgage payments vary. In case of ARM, the rates vary depending on the prevailing market rates.  

Refinancing can also be of immense help if you need some extra cash to pay off your other debts. This is only possible if you have some extra equity left in your property.