How Will the End of the First Time Home Buyer Tax Credit Affect Mortgage Loans?
Although the brief era of the 2010 Home Buyers Tax Credit has come to an end, the expiration may not actually have a negative impact on the average American looking to become a first time home buyer. According to a survey released by Prudential Real Estate and Relocation Services Inc., 90% of consumers felt that the tax credits have been beneficial to first-time buyers and the overall market. Meanwhile, 65% of home-shoppers feel that the credits will have little effect on those looking to purchase a home.
As the housing market remains seemingly unstable to potential buyers, the survey shows that there's a general sense of optimism. According to the survey, 46% of consumers expect real-estate values over the next year to increase; meanwhile 12% feel that values are on the decline. 79% feel that there will be an increase over a five-year period, while 20% of that feeling that the increase will be prominent. In short, the survey seems to depict the confidence in home-buyers sparked by first time home buyer loans. This confidence spells a brighter future for a market that's seemed dismal for years.
The Prudential survey helped to pin down concerns such as rising interest rates and unemployment, both serving as the most crucial factors having impact on those looking to buy homes. The end of the tax credit for first time buyers, however, was the least of their concerns. First-time mortgage rates remained the most substantial concern, with 61% feeling that they were "very important" in their home-buying decision. A majority of those surveyed expect interest rates to rise.
Although the real estate market has taken a plunge in recent years, the survey seems to imply that people are still keen on becoming homeowners and that homes remain good investments for the future. In fact, 75% felt that owning a home is a better long-term decision than renting. The survey also showed that owning a home remains thought of as a better investment than individual stocks, bonds, mutual funds, and saving accounts.
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