In the previous blog I talked about the $100k house and the benefits. Right there you are saving money but let’s continue- If you receive the full tax credit of $8,000 (which is something you don’t pay back as long as you keep the house for 3 years or more), then isn’t that really like getting the house for a lot less? An aside…I advise all of my buyers to make one extra payment toward their loan each year. Depending on the loan and specifics, this could cut your term down by 7-9 years…What if this tax credit could be used against the principle on your brand new home? If, at the very least, you used the $8,000 toward your monthly payments, the government would basically be paying for almost 15 months (based on our $567/month figure from above) of your payments on your new home.
Now, I don’t advise that at all but my point is this- there are so many ways to save and take advantage of the opportunities out there. Let me blow your mind- what if, using the same logic from above on the annual extra payment toward principle, you use the $8,000 as one principle payment at the end of your 1st year- instead of owing $98,653 on your $100,000 house, you owe $90,653. If you continued to make your $567/month payment and never made another principle payment, you would pay your house off in 24 years instead of 30! If you continued to pay the extra payment after your big $8k payment for the next years after, you’d shave off between 4-5 more years on your mortgage. Everybody wants to save in a recession and spread their money out a little further. And, so many people are letting fear run their lives (or other peoples’ fear). If you could save on rent, start owning your own house (which usually means more space then in your rental), and get a tax credit all at the same time- what about this doesn’t make sense? Here is a website link to the tax credit facts, differences between the 2008 version and the 2009 version.
Link to First-Time Homebuyer Tax Credit
Tags: Principle reduction, Rentals, Savings
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