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First time homeowner? (Apr08-June09) 15-year 0% APR $7,500 loan from Uncle Sam


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http://money.cnn.com/2008/08/15/real_estate/buyers_tax_credit/index.htm?postversion=2008081814

 

Basically, heres how it works..

 

If you are a first time home buyer (or first time you've owned a home in 3+ years) between April, 9 2008 and July 1, 2009 uncle sam will give you a $7,500 loan @ 0% interest (free money!).

 

You have 15 years and $500 per year additional taxes to pay it off ($7500 total due). Anyone with a quick inflation calculator can see that this is a great deal - chances are in 15 years that $500 is worth about $250 today.

 

Put that money in a safe, conservative investment or put it towards upgrades to your new house to add value when you sell.

 

One caveat is if you sell the house, the balance of the money borrowed is due.

 

Sounds too good to be true- the government is really offering big discounts and incentives to get home inventory levels down.

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+1. Good call.

 

If you're in Ohio I would wait until 2009. Check the fine print...the gov't deal will go into next year to still be redeemed. Why rush out now to buy something?

 

I just bought a house - I wanted to wait a little bit, but I found one in the location I wanted at a price I thought was a steal..

 

One thing to consider about waiting for our crap economy to bottom out and recover: Inflation. Inflation is projected to rise quite a bit in 2009 in some predictions even triple.

 

http://www.frbsf.org/education/activities/drecon/2002/0206d.gif

 

Fed interest rates are historically low, and they will have to rise eventually, because inflation will go out of control with really low rates and the Fed will need to raise rates eventually. Mortgage rates go up with inflation, , as do fed rates , see the graph above. Inflation in the 70s were out of control, and people were paying 12% or more for mortgages.

 

$200,000 over 30 years @ 6% interest = 1200 per month

$200,000 over 30 years @ 10% interest = 1755 per month

 

I'm not saying 'now is the time to buy', I think prices will fall through 08 and some of 09, but if inflation goes out of control, mortgage rates will really suck and will cost the average borrower much more than what they gain in a 10% decrease in a selling price by holding out for another year.

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"Buyers who have not owned a home in the past three years can take a tax credit worth 10% of a home's sale price, up to $7,500, whichever is smaller.

 

The credit is good for homes closed on after April 9, 2008 and before July 1, 2009, and can be taken on taxes filed during 2008 or 2009. Even buyers who bought a home before the bill passed, but after April 9, can claim the credit."

 

 

Nothing to do with first time home owners. Also, does not do any good unless you buy a home between April 9, 2008 and July 1, 2009.

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I'll be taking advantage of this soon. I was giong to buy a house this fall, but my parents just bought a lake house 10 mins from my work that they won't be using until Feb. I'll be moving into there next month and saving even more money and buying my house next year.
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