First Time Home Buyer Credit - $8000 - FREE

Expires December 2009. From now and through November 30 2009, anyone who qualifies as a “first time homebuyer” (has not owned a home in the last three years) who buys AND CLOSES on a principal residence will receive a substantial tax credit of $8,000.  

Firstly, let’s be clear about the difference between a TAX CREDIT and a TAX DEDUCTION.  A TAX CREDIT is a dollar for dollar reduction in a person’s tax obligation which will result in a refund in that amount for most buyers - or, as you are seeing in ads from some lenders this can also be turned into down payment money up front.  A TAX DEDUCTION, on the other hand, is simply a reduction in a person’s taxable income and results in a savings of a percentage of that amount based on the tax payers tax bracket (i.e., for someone in the 28% tax bracket, the saving would be $2,240).  In contrast to the TAX CREDIT that was in place
 last year, this $8,000 NEVER has to be paid back to the Federal Government.

So, let’s assume the Orlando Real Estate Pros sell you a $200,000 home and you obtains a 90% loan or a loan for $180,000 at 4.875%.  The monthly P&I payments would be $952.57.  Now assume that values drop another 10% this year and you wait for the bottom (which buyers ALWAYS MISS) and a year from now you can purchase the home for $180,000 with 90% financing with a $162,000 loan, but due to the market rebounding the rates go up to 5.5% (very conservative) which brings the payments down to $919.82 P&I for a savings of $32.75 per month.  Under this scenario, it would take you 20 years to recapture the $8,000 tax credit without taking into consideration inflation and the real cost of money.  If we calculate this scenario at a more realistic interest rate of 6% a year from now, the payments are $971.27, which is $18.70 per month HIGHER than what the home could be purchased for now AND you now miss the opportunity to get the TAX CREDIT.

There are only 7 months left for buyers to avail themselves of this opportunity. Contact us for more info.

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