Michigan Real Estate Purchase: First Time Home Buyer Tax Credit

There is a whole bunch of confusion concerning this new First Time Home Buyer Tax Credit and I am looking to simplify things for you like I have been trying to do with all of my blogs.

I think that the most important thing to realize here is that it is not free money! It is not. It is in effect a no-interest loan from the government. It is to be repaid over a 15 year period. You won’t be able to default because it will be taken out of your income tax refund of added to your charge every year.

So, I shouldn’t take it? Of course you should take it! If you aren’t sure why you should, call up Citibank and try to get a 0% loan from them with a 15-year term. Unless you are complexly set credit and savings wise…which I think it pretty much NOBODY in Michigan, you should take advantage of this.

What you have to be careful of is blowing this money on useless stuff and then ending up owing it back to government.

There are many good ways to use this money, here are a few examples:

Pay down the principle balance of your mortgage. In fact, if you get $7500 and put it directly on your principle balance of a $100,000 mortgage, that one payment will cut 4 years and $60,000 in interest payments right off of your mortgage! Even when you repay the loan, it will still end in an overall savings of $46,000.

Pay down high interest credit cards. In effect, this tax credit allows you to do a completely risk free debt consolidation loan. Pay that high credit card loan off, use the boost in credit score to get a better credit card at a lower interest rate, let the paid off card sit there open with no balance and enjoy a great credit score for quite some time and save thousand on future mortgages, credit cards, car insurance…you name it.

Invest it. Ok, so maybe the stock market isn’t so hot now, but if you can find something safe that it sure to yield, it is a win-win for you my friend. Heck, even a high yielding savings account or a 2-year CD will make you great money.

Take advantage now, because the tax credit goes away if you close on your new home after July 1, 2009. Happy Home Hunting to you all!

For more in-depth help, go to our website:
http://www.iconmortgagelending.com/
Labels:

Comments

Post a Comment

Popular posts from this blog

Michigan Real Estate Purchase: The Deadly Repair Escrow

Bum Bum Buummm. Enter scary music and cold sweats, you just fell in love with a home that has a broken furnace and a big orange stain where a bathtub used to be. Chances are your financing is going to resemble that orange gunk on the tile right? There are options. With conventional financing, yes you will be sunk. The bank will only want a safe asset to secure. There are some programs that allow flexibility here like HomePossible, but it is very impractical. The good news is, that with the foreclosure boom, came the need to repair existing homes as production of new homes slowed to a crawl. Government financing fills the void of sensible repair financing. Actually it filled a long time ago before the housing boom started and home construction grew out of control. With FHA there is a possibility for a repair escrow; however the repairs must be minimal. The better option is the 203k loan that will allow a closing to take place like normal but provide you with money for all sorts of repa
Read more

First Time Home Buyers: Or, How the Newbie Gets Stymied

So, you want to buy a home, but with so much new to you it can become a whirlwind of confusion and indecision. That’s why I bring you this vastly important blog about the mental aspect and general overview of being a first time home buyer. First, don’t panic. Listen to the people and professionals around you, filter it through your own common sense, and believe in yourself. I want to own a home so much that I won’t: Listen, much like dealing with yet another embarrassing season from the Lions…you will go through many emotional stages when buying a home ranging from: “we’re only 0 and 4 and still in the hunt,” to, “WHY DID THEY SIGNED CULPEPPER?” This translates into your situation as, “We can get so much for so little,” to, “EVERYTHING IS TOO EXPENSIVE.” The most important things to realize are the same lessons that thousands of Americans learned when the housing bubble burst. It’s not a house; it’s a home. It’s not a status symbol; it’s where you build your future. And, it’s not a
Read more

Michigan First Time Home Buyers: Preparing Your Documents

I find that the first hurdle a First Time Buyer faces is getting their paperwork together. I am not sure why, but honestly this simple task dissuades many people when they start to apply. Perhaps following this list and having it ready at the outset will help the process seem smoother. Last two years of W-2s or Tax Returns. If you can’t find them, you can always contact your employer, your tax preparer, or the IRS for a copy. Most recent month of pay stubs. 1 month worth…the most recent available. Most recent 2 Months of bank statements. If you don’t get paper statements, you can print your online statements, but you will need to take them to your bank to get verified and stamped. Most recent 401k statement. (If you have one.) Copy of your driver’s license and social security card. The Patriot Act requires us to check these. Have these items ready to go before you look for a loan officer and DO NOT trust anyone that will try to quote you a payment or interest rate before they even see
Read more