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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.
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See Debbie on NECN |
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!
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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.
- 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.
- 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.
- 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.
- 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.
- 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.
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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
President
Westchester Mortgage
P.S. You're receiving this E-Newsletter because you have a prior relationship with me or with Westchester Mortgage. If I've sent this to you in error, or if you want to remove yourself from the list at any time, just click the "SafeUnsubscribe" link at the bottom of this e-mail.
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Click here for some tips on
how to choose a mortgage broker!
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