November 2008 Vol. 3 No.10
• 1st Time Homebuyer Tax Credit - Know the Fine Print! • See Debbie on NECN • November's Home Value Improver • About Us

1st Time Homebuyer Tax Credit - Know the Fine Print!

In the interest of helping first-time homebuyers, the federal government has enacted a law that provides a $7,500 tax credit to those who qualify -- single people making less than $75,000 annually and married couples making less than $150,000 per year. (Some buyers who make more qualify for a portion of the credit.) The credit applies to homes bought between April 9, 2008 and July 1, 2009.

It's important to note the difference between a tax credit and a tax deduction. While a tax deduction lowers the amount on which a person pays taxes, a credit is straight money. For example, if you owe the federal government $7,500, you would not have to pay anything if you had a $7,500 tax credit. If you didn't owe the IRS anything, you would receive a refund of $7,500.

There really is no such thing as a free lunch, though, especially when you're talking about Uncle Sam. The tax credit has to be repaid over 15 years, but it is interest free. And consumers do not have to start the repayment process until two years after they take the credit. Consumers who sell their homes also have to repay the tax credit. So, the tax credit is really more of a no-interest loan. For example, a homeowner with an interest rate of 7% saves up to $4,200 in interest payments over the 15-year period. Technically, the amount of the tax credit is 10% of the home price, but it is capped at $7,500. If you find a home cheaper than $75,000, let me know!

So no one should pass up a no-interest loan from the federal government, right? Well, not exactly. For people who do not need the money, it may not be worth it. Why take out another loan if you don't anticipate problems paying the mortgage you are getting? And the money needs to be paid back in a lump sum if you sell the home within 15 years. Plus, how likely is it that you will put the money into the bank to earn interest for 15 years? If you want the tax credit so that you can buy something else, think again. Owing $7,500 is owing $7,500.

Like any financial step you take when buying a home, there is no "one size fits all." The existence and temptation of this tax credit is yet another example of why everyone needs individual advice when it comes to getting a mortgage.

See Debbie on NECN
Debbie on NECN 11-08

Debbie Siegel recently was interviewed by New England Cable News about the idea of bailing out homeowners as part of the $700 billion federal financial industry bailout. Here is an excerpt from the video:

[Debbie] has brokered over $80 million worth of mortgages in this decade. She warns foreclosure relief won't be simple: "You've got two groups of people: people who overbought, knowingly, and people who didn't overbuy but due to illness, due to job loss are struggling with their mortgage payments. There should definitely be a distinction made."

See what else Debbie had to say!

November's Home Value Improver

5 Steps To Winterize Your Home

A collective groan can be heard when people first notice that it's already dark when they leave their offices at day's end. The days get shorter and colder, and it gets harder to keep your house warm and efficient.

The Thanksgiving break is a great time to take the ever-important step of winterizing your home. Chances are, you'll be so wrapped up in holiday activities in December that you won't have the time or energy to do these things.

  1. Get your heating system in order.
    Whether that requires you to bleed radiators, get your oil burner serviced, or having your ducts cleaned, do it now before the gas and oil companies get too busy, or before you have an emergency. Don't forget to stock up on filters, too, so you can change them regularly.
  2. Get your outdoor equipment ready.
    Now is a good time to put the beach chairs and picnic table behind the snowblower and shovels in the shed. Stock up on rock salt, and imagine how prepared you'll feel after the first snow. It's also time to put away the outdoor furniture cushions, gardening tools, and plants.
  3. Check your fire warning, prevention tools.
    Change the batteries in your smoke and carbon monoxide alarms. Why not keep some 9-volt batteries on hand so that when the maddening fire alarm chirping starts at 4 a.m., you have an easy solution? Check out your fire extinguisher. If it was a housewarming gift in 1976, it might be time for a new one.
  4. Prevented unwanted guests -- those of the furry and windy kind.
    Seal up cracks and holes in your foundation to prevent critters from making your basement their winter home. Meanwhile, seal up cracks in door jams and windows with weather stripping to prevent drafts.
  5. Be ready for an emergency.
    Gather together everything you would need in case of a power outage and put it in one place. Toss some warm blankets, battery-powered lanterns, and food that doesn't require cooking in an easy-to- reach storage container.

Too many homeowners are in crisis right now - the saddest thing to me is that many homeowners could have avoided the situation they are in if they had had a plan and bought within their means.

It is so easy to get caught up in the excitement of buying a home and to think, optimistically, that your income will go up, expenses and upkeep won't be that high and you will be able to afford the home. But many homeowners have found that this has not happened. If you or someone you know is making a major home-related purchase, I hope you will give me a call to get a realistic plan in place - one that will not leave you up at night worrying about the mortgage.

During this Thankgiving season, I am very thankful for all the subscribers to my newsletter. I appreciate your taking the time to connect with Westchester Mortgage on a monthly basis!

As always, please feel free to call or email anytime for more information on any mortgage topic!

Best regards,
Debbie Siegel
Westchester Mortgage

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