Are You Missing Something with the New Homeowner Tax Credit?
I hear people scoffing at the new first-time homebuyer tax credit, saying it's nothing more than a loan. It's called a credit because you obtain it as a credit when filing taxes. It does also have to be repaid so it seems more like a loan. However don't throw out the baby with the bathwater! Take a moment to look at the benefit. . .
When most first-time buyers leave the closing table, they have little left in savings. And as new homeowners, they are now confronted with a mortgage payment that exceeds what they were paying in rent. They have a home to furnish, with more rooms to fill with furniture than their apartment in most cases. They may also need to spend money on painting, carpeting and window coverings. Plus, there are other home ownership necessities such as a lawn mower, ladder, etc. that must be purchased, not to mention the possibility of repairs or improvements the home may need.
More often than not these purchases are made with a charge card, with interest rates ranging from 12% to 19%. These additional monthly expenses for home-related purchases are in addition to the large monthly mortgage payment they now have. So why wouldn’t a buyer be excited about obtaining the $7,500 tax credit, and having the benefit of repaying it over 15 years without interest?
What if a first-time buyer really liked a home they saw that needed some major repairs or renovation, a home that represented a great buying opportunity? But after much consideration, they decided against buying it. They just didn’t have the financial resources after the closing to accomplish the type of repairs required, such as a new furnace or new roof or new siding or new windows. Wouldn’t the opportunity to obtain $7,500 in an income tax refund possibly be the answer to this type of concern?
When most first-time buyers leave the closing table, they have little left in savings. And as new homeowners, they are now confronted with a mortgage payment that exceeds what they were paying in rent. They have a home to furnish, with more rooms to fill with furniture than their apartment in most cases. They may also need to spend money on painting, carpeting and window coverings. Plus, there are other home ownership necessities such as a lawn mower, ladder, etc. that must be purchased, not to mention the possibility of repairs or improvements the home may need.
More often than not these purchases are made with a charge card, with interest rates ranging from 12% to 19%. These additional monthly expenses for home-related purchases are in addition to the large monthly mortgage payment they now have. So why wouldn’t a buyer be excited about obtaining the $7,500 tax credit, and having the benefit of repaying it over 15 years without interest?
What if a first-time buyer really liked a home they saw that needed some major repairs or renovation, a home that represented a great buying opportunity? But after much consideration, they decided against buying it. They just didn’t have the financial resources after the closing to accomplish the type of repairs required, such as a new furnace or new roof or new siding or new windows. Wouldn’t the opportunity to obtain $7,500 in an income tax refund possibly be the answer to this type of concern?
posted by Barbara Gaines at 7:49 AM
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