Fizzle1979

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The $7500 'tax credit'...I like how they try to sale it as a tax credit it when it's really a loan... do you get that automatically when you file your taxes or what?

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No comment on the government trying to treat us as dumb. BUT take the tax credit that you get, put it in a CD, and pay the "loan" back over the 5 years, That way you have a nice nest egg that you won't feel the cost of.

You have to submit the info when you file your taxes next year. You will want to let your tax person (or computer program you use) that you purchased a home, as there will be other tax breaks you will be able to take advantage of. You will be able to deduct your interest and your home taxes you pay.

Charles

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No comment on the government trying to treat us as dumb. BUT take the tax credit that you get, put it in a CD, and pay the "loan" back over the 5 years, That way you have a nice nest egg that you won't feel the cost of.

You have to submit the info when you file your taxes next year. You will want to let your tax person (or computer program you use) that you purchased a home, as there will be other tax breaks you will be able to take advantage of. You will be able to deduct your interest and your home taxes you pay.

Charles

I purchased my first home in March of 2007, and have never even heard of this tax credit you guys are speaking of.

Fizzle, I don't mean to thread jack too badly-but I'm truly curious!

Would it be too late for me to claim it now though?

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They just recently added it. Its another government program to artificially inflate the housing market. A $7500 gift for first time homebuyers.

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They just recently added it. Its another government program to artificially inflate the housing market. A $7500 gift for first time homebuyers.

Hmm so too late for me, being that I closed March 07 right? Just my fricking luck! :lol:

Thanks!

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This pretty much explains the "tax credit". It is a zero percent loan but you have 15 years to pay it back. If I do decide to close on something, I will definitely do this. This will pretty much be cheaper than taking a pension loan (even though the interest goes back to me....blah blah).

http://www.bargaineering.com/articles/7500-first-time-homebuyer-tax-credit.html

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Hey thanks AA! Now I'm pissed though because I can't get it....:lol:

I don't blame you.....but don't shoot the messenger....

This isn't a bad deal though. I actually would qualify if I bought something now. My MAGI is definitely below $75000 (my gross is a bit higher, but thanks to my 457b, I bring it lower :D ).

Yeah, I might have to start making some calls....the time is definitely right...just like prom night. :D :D :lol::lol::lol:

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What a bizarre plan though. Hey, here is a massive tax credit if you buy something. But then you have to pay us back over 15 years. Haven't we learned about incentivizing homeownership with goodies?

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What's that classic quote? "Those who cannot remember the past are condemned to repeat it." There's a million variations of that quote but I think it is one of the best.

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Honestly, I don't see what's so bad about this. You have 15 years to pay it, and you pay it back most likely with a line item when you file your taxes...and you lose what, $500 a year? And if you sell your house you pay off the difference with probably another line item. And at zero interest? It'd be foolish not to jump on that, if you could, providing it's going to be used wisely.

Meanwhile if you put the $7500 into so much as a savings account, instead of being ghetto-fabulous by paying for flat-screen TVs, you'd have actually made money off the deal (in dollars, not cents).

Most people unfortunately won't do that. They will pretty much squander it and then whine about about the extra expense.

Yet another thing I did not know about until I read CIC. :D

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You should take it if given the opportunity. I would too. Its the program that I have a beef with. They are using incentives to entice more people to become homeowners in order to solve a problem caused by unqualified people becoming homeowners. Its just plain stupid. Not to mention that this is $7500 that they are pulling out of Treasury in a time when we are about to run a $1,000,000,000,000 deficit. In other words, we and our kids all take on just a tiny bit more debt so that a homeowner gets a nice little "bonus". Just foolish.

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I see what you're saying, jq,...and with that you're right. If someone was not looking for a house and all of a sudden has a carrot dangling in front of them, then they would be foolish to jump into something such as homeownership. I just happen to be looking for a house and have been for quite sometime. Just waiting for the right time for me to have a GOOD downpayment. But this "tax credit" was just icing on the cake for me as I meet all of those requirements (lesson for those making over $75k....if you need a reason to sock money away into your 401k or traditional IRA, it will lower your AGI).

I would never advocate homeownership to someone who would not know what they're doing. I was on a website reading some guy's blog about some people who bought a house and then their water heater broke and then called their mortgage company about it and was asking when the "super" was coming. At first, after I laughed really hard, I thought man, this guy has to be joking...no one is that stupid. But I think he was trying to illustrate a point: some people are not ready to own a house OR may never be ready. Just because the government, or anyone throws money at you to buy a house...does not mean you should do it. It takes work, mental and physical work, to bother with a house. And I believe I'm near my time to be ready for it...

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Well I was supposed to get an inspection 09/12 on the condo. But because of Ike that didn't happen. But the condo itself appears to have been spared by Ike. I had to get an extension on the option period and I have been doing all this without a realtor. So thats been fun. Supposed to get an inspection done 09/24 at 9AM. Called the local lender today to ask them if we were still on schedule to close on 10/09 and the lady said she would call me back but I didn't hear from her.

So since we are this $7500 loan thing...where do I get the money from? Do I need to tell my lender?

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So since we are this $7500 loan thing...where do I get the money from? Do I need to tell my lender?

Fizz, do a google or read the link I wrote earlier....I believe it will reduce your tax liability dollar for dollar.

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From the sounds of it, you would simply claim it as a 2008 TAX CREDIT on your tax return you'll file early in 2009. You can't use the money as a loan at closing because you wouldn't be eligible for the credit until you've bought the home and you know that you'll be within the 2008 income guidelines.

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I found this link extremely helpful.

http://www.federalhousingtaxcredit.com/faq.php

So here is my question. If I'm putting down 5% on a 55K loan. And I'm going to get 10% from the IRS ($5500) and I could easily save another 5% and have the 15% I would need in order to get rid of my PMI cost $38 month.

Does anyone think it's a good idea to take the $5500 and put towards the principal in order to avoid paying PMI? Of course from my understanding both interest and PMI are tax deductible. So would it really be a good idea?

Also I changed my tax status to EXEMPT from now until the end of this year. That way I will have a little bit more cash each week.

Basically I'm looking for advice on what to do with the $5500 I would be getting in Feb 09.

The title company is at a stopping point because our county court house is closed due to IKE. But I think it's going to open tomorrow or Thursday. I met again with the lender on Friday to discuss a new closing date. Per my contract I'm scheduled to close on or before 10/09 but I think I might be able to close within that time.

Kinda a bunch of thoughts that just all ran out of my fingers...thanks for your help!!!!

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MI and mortgage interest are tax deductible (under certain conditions). Earnings are taxable. It is a tax neutral scenario. ex: Your mortgage interest is 6%. Your highest marginal rate is 25%. You have a net 4.5% rate. Paying off the mortgage gives you a net after tax return of 4.5%. Compare to: You buy a CD for 6% (very high!). You pay tax on earnings at your highest marginal rate- same as before at 25%. You therefore receive a net 4.5% return. Its a breakeven.

But imo, you should definitely pay down the mortgage if the rate is above 5%. The assumptions above ignored the money you'll save on MI and its likely you'll not receive a SAFE 6% return in any investment right now. Just make sure you have some sort of reserve fund in case of emergency and slam down the payment with your tax credit. And check that you can get rid of MI so soon. I'm stuck in mine for 60 months minimum- even if I become wealthy overnight and pay off the mortgage entirely.

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The condo is a no go. The lender first told me I could not go with FHA because it's a condo. Ok I'll buy that. So then they tell me I will be required to have 5% down to do conventional. Well today the lender tells me that the units are more than 50% investor owned and no matter how much down payment I come up with, they can not find a lender.

Argh the joys of buying a house!

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