| Have you ever heard of the Housing and Recovery | | | | savings and or checking account once the purchase |
| Act of 2008? Well today we are going to focus on | | | | of their home is complete. Now they have a home |
| one of the benefits, the $7500 First Time Home Buyer | | | | to decorate, furnish and in some cases repair and |
| IRS Tax Credit. | | | | paint. Majority of these first time home buyers will |
| Even with interest rates at historical lows and with a | | | | now turn to their credit cards to pay for these |
| wide selection of discounted homes on the market, | | | | expenses, which will come with pretty high interest |
| people still weren't buying, so the government came up | | | | rates. So when compared to have a credit card |
| with this tax credit to stimulate and provide financial | | | | payment which comes with interest charges, versus |
| assistance for First Time Home Buyers to buy now | | | | and an interest free $7500 loan…..it now seems a little |
| rather than wait. | | | | more attractive. |
| The $7,500 First-Time Home Buyer IRS Tax Credit | | | | Now for those of you first time home buyers that are |
| only applies to first-time home buyer purchases of a | | | | a little more well off financially, this can still benefit |
| primary residence between April 9, 2008 and July 1, | | | | you….here's how. |
| 2009. It is important to understand that this is a TAX | | | | Let's assume a $200,000 mortgage was needed in |
| CREDIT and not a TAX DEDUCTION. Now a tax | | | | the home purchase at 6.0% interest rate fixed for 30 |
| credit is a reduction in income taxes owed! In other | | | | years. What if the $7,500 tax credit was a refund |
| words, when a buyer files their income taxes for the | | | | which you used to pre-pay the mortgage? Using |
| year the home was purchased (April 2008 - July | | | | simple math that would be an annual interest savings |
| 2009), they may be able to subtract $7,500 from the | | | | of $437.50; which is actually less than the $500 |
| amount of federal income tax liability, which will either | | | | payment per year on the $7500 Tax Credit Loan. |
| put more money in your pocket as you will get an | | | | The main benefit here is not just the payment savings |
| increased tax refund or reduce the amount of tax still | | | | but the outstanding mortgage balance will be reduced |
| owed. | | | | by $7,500 and each future mortgage payment results |
| However, this tax credit is not FREE. Yes, this is not a | | | | in savings in mortgage interest and increased reduction |
| hand out from Uncle Sam; it is a loan that has to be | | | | in principal mortgage. As each monthly mortgage |
| paid back. Repayment will begin 2 years after the | | | | payment go to reducing the mortgage balance and |
| credit is claimed, and must be repaid within 15 years. | | | | less is applied to interest. Together these savings will |
| So that's a $500 payment per year. It's an interest-free | | | | exceed the $500 cost of repayment of the tax credit. |
| loan for 15 years. | | | | The benefit over the long term in interest savings and |
| Now before you get turned off by this "LOAN,” lets | | | | principal reduction will be quite amazing. Talk about |
| take a look on the benefits this $7500 tax credit may | | | | good old Uncle Sam helping you payoff your mortgage |
| provide. Majority of first time home buyers have | | | | early! |
| walked away from the closing table with an empty | | | | |