DEARBORN— Among the most effective economic stimulus policies proposed by President Obama and passed by Democrats in Congress this week is a refundable, $8,000 tax credit payable to first time homebuyers and those who have not owned a home for three years.

According to the National Association of Realtors (NAR), the bill provides for an $8,000 refundable tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. The amount of the credit is the lesser of 10% of the purchase price of the home or $8,000.

Most of the mechanics of the credit will be the same as under the 2008 rules. The credit will be claimed on a tax return to reduce the purchaser’s income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser on their 2009 tax returns.

As we all know, the housing market has taken a hit during the recent economic downturn. The NAR expects this to spur home sales and stabilize plummeting home values. There is one caveat: if the home is sold within three years, the tax credit is due on sale.

However, with the passage of President Obama’s stimulus bill this is great news for those who are currently renting or those who would like to buy their first home. Most homebuyers in the area live in their homes for over 10 years. A 10% buffer on the investment will surely inspire thousands to get into the market and relieve the downward pressure on housing values. This is undoubtedly a great benefit to all. Home values and tax revenue are vital to the functioning of services like education and city government.

Mortgage requirements have gotten tighter than before the “credit crisis.” Still, credit is widely available and insured loans through programs by FHA and MSHDA havemade home financing available to millions of Americans with modest income and mediocre credit.

With today’s average 30 year fixed mortgage rate at about 5.5%, the payment on a $100,000 loan is only about $550 a month. Many renters will see this tax credit, rock-bottom prices and super-low interest rates as a perfect storm to move into the home they will live in for decades.

With the way housing prices are in the Dearborn / Dearborn Heights area, hundreds of buyers are moving into the traditional 3 bedroom homes for prices at or slightly above their $600-$800 average apartment rent payments. With that fact in mind, is it a huge risk to buy in this market? Not at all.

If you would like to schedule an appointment, see some houses in your target area, learn more about the tax credit or mortgage approval process or sell your home.

Contact realtor Tarek Baydoun at 313.729.3737 or tbaydoun@realestateone.com. Or visit www.tarekismyagent.com.