Homebuyer’s Credit: It Might be Better to Wait

If you are rushing to purchase a home and sign a binding contract before May 1, 2010 in order to get the homebuyer’s credit (a maximum $8,000 for first-time buyers or $6,500 for repeat buyers) and secure a low mortgage rate, it might be better to wait especially if you are still unsure.  According to Jack Hough at SmartMoney, once these incentives disappear, interest rates will increase 0.75% but home prices might drop as much as 5%.

If you have already entered into a binding contract, all is not lost.  An option is to renovate the basement of a house or the other unit of a duplex and rent it out for income.  This will supplement your mortgage and help you pay off your debt much faster.  For many cities and neighborhoods, the rental market is still pretty robust.  Just be mindful of all the responsibilities and liabilities that come with being a landlord.

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