Home buyer tax credit: Take two.

In a bid to give another shot in the arm to the housing market, Senate Democrats reached an agreement on Wednesday that would extend the $8,000 first-time home buyer tax credit and introduce a new credit for existing homeowners. This is a tentative compromise worked out by some Senate members and the specifics could still change.

If the measure passes, homeowners would be eligible for a credit of up to $6,500 if they have lived in their prior residence for five years. The credit would apply to home purchases under contract by April 30, 2010 as long as they close by June 30. First-time buyers would continue to be eligible for up to $8,000.

As for income limits, the new credit would be available to individuals earning up to $125,000 or couples earning $250,000. That’s up from $75,000 and $150,000, respectively, for the current tax credit, which is set to expire on Nov. 30.

The measure is one of several bills that have been floated in Congress aimed at extending the credit – and prolong the bump in housing demand it seems to have created. (The National Association of Realtors estimates that the credit has generated 350,000 to 400,000 home sales this year. Moody’s Economy.com puts the number at 400,000.)

Lawmakers expect to consider the measure as part of a bill to extend unemployment benefits that was approved last month.

So what kind of impact would this measure – if it passes – have on home buyers in the market now? Here are a few things to consider.

That depends. For non-first-time buyers, if you’re looking and haven't found the right property, keep looking. "But maybe hold off on putting an offer on a house until the legislation is defined, because $6,500 could make a big difference,” says Pam O’Connor, the president and CEO of Leading Real Estate Companies of the World, an international brokerage network of real estate companies.

“If I was in the marketplace this month, I would probably wait. If there’s an opportunity to get a $6,500 credit, sure, why wouldn’t I wait – just to see what’s passed,” says Keith Gumbinger, a vice president at HSH Associates, a mortgage tracking firm.

If you decide to wait on a possible tax credit, you might end up paying more for the home than it’s valued at today. Depending on how sales are moving in your marketplace and what you’re looking for, there could be some risks in waiting.