From Q&A: Advice for navigating the housing downturn by Ryan Frank, The Oregonian
Now could be a good time to buy for first-timers who qualify for an $8,000 federal tax credit. Prices have dropped to a more affordable level and interest rates are still relatively low.
You can find a two-bedroom, one-bathroom starter home in a decent neighborhood for $325,000 or less. Most first-timers are buying with a Federal Housing Administration loan that requires a 3.5 percent down payment. On a $325,000 house, you’d have to come up with about $11,400. But two-thirds of that will come back to you with the tax credit.
If you already own a home, the answer is more complicated. You have to sell one home to buy another, and you won’t qualify for the tax credit.
The math can work for people who have owned their home for five years or more and never borrowed against it. You’ll lose some value on the sale but you could earn it back and then some on a new purchase.
