by Carmen Alexe

Created on: July 28, 2010

Do we really need a Home Buyer Tax Credit?

I speak from experience...all acquired during the subprime credit expansion era when just about everyone, except for my dog, qualified for a mortgage loan.  Remember the days of no down payment 100% Financing for all? How about the no income or stated income verification for all?  And let's not forget the times when our homes were our personal ATM machines that were providing us with the money to go on cruises, buy those boats, or do whatever we wanted.  Sadly, we're now paying the price for all of this but have we learned anything, or let me rephrase this...has our government learned anything at all from this?  I don't think so because here we go again, HUD thinks that home buyers should be compensated with a Tax Credit gift, generosity of the tax payers of America.

Politically incorrect however it may sound, I believe there should be NO Homebuyer Tax Credit. Picture this: some first time home buyer with marginal credit qualifies for a FHA loan with a 3.5% down payment. He can even borrow this down payment from family so he does not have to have saved it on his own. Then through the $8,000 Tax Credit (paid for with Tax Payers Money) the new homeowner is basically reimbursed for his down payment. In the end, he got the house with no money down just like during the sub-prime mania when everyone qualified for 100% financing. It is well known that when something is given to us for Free we don't appreciate its value. Therefore:

1. One must earn it first, and..
2. He should pay for his own down payment instead of having the Tax Payers pay for it

All it does, this Tax Credit leads the way to another bailout, the FHA bailout. Don't we have enough bailouts by now?  FHA is already under water and short on their reserves, where will they get the money to bailout the lenders in case of losses?  So, if we have another wave of foreclosures, this time on the FHA loans, HUD will resort to the all so known technique of asking the Fed to print money to bailout another government program.  In the end it will still be the liability of the already burdened tax payer.

If we are to go back to the basics of Free Market Economy (the only way for a healthy economic future) then the Socialist way of "having the village to raise a child" concept must disappear from society. We need to promote self-sufficiency rather than govt dependency, savings rather than spending, delayed gratification rather than instant gratification, and how about if we bring common sense and logic back in our lives!

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