Real Estate Blog

We Would Love to Hear Your Feedback.
Did you find this site easy to use? Was the information valuable? Please click here and give us some feedback so that we can make this site better.

Tuesday, 20 April 2010

Who Cares If I Miss Out On The Tax Credit?

Who Cares If I Miss Out On The Tax Credit?

Many people who are looking to buy a home now, NEED the Tax Credit to close a gap in their finances. But not everyone feels that way.

As the days tick away, I have started to hear some buyers already begin rationalizing why they haven’t yet gone to contract. They say things like, “$8000 isn’t enough money to rush me into buying a home”. I am not sure they are right (especially as you see interest rates on the rise at the same time), but I do know that for people who “discount” the impact of $8000 need to open up their minds to some “out of the box” thoughts.

Here’s one thought process: If a customer had sufficient monies to close and cash reserves in the bank after closing such that they didn’t NEED the $8000, as they contend, I would propose to those clients… this strategy. Pay $8000 in additional Discount Points on your mortgage! You see, by doing this our buyers gain two benefits:

First, as I am sure we all know, Discount Points are tax deductible as prepaid interest on the mortgage. That means our Buyer (assuming a 28% top Income Tax Bracket) will receive a $2240.00 higher tax refund next year…..that’s good!

Second, by paying 2 points on a $400,000 mortgage (cost $8000), our borrower is likely to receive approximately a .50% lower interest rate on their mortgage. Over the course of the first five years of homeownership, they would save nearly an additional $8000 in monthly mortgage payments…that also is good!

Or, How About This? By paying the points for a lower rate, you would reduce your Principal & Interest Payment about $132/month on your $400,000 loan. If you were comfortable with your original payment, you could actually borrow an additional $20-25,000 for the same payment. That’s $20-25,000 that you could put into a 203K loan to finance home improvements OR it’s buying the bigger house OR buying in a better part of town….for the same payment you were willing to accept without the tax credit.

Here’s another: $8000 is enough money for a skylight, a living room set, a large Jacuzzi/hot tub, a deck, an awesome barbecue, an above ground pool, a plasma television or one of dozens of other cool things you might want to add to your new home. Or maybe, it’s the money for a vacation or a top notch House Warming Party. Whatever you spend it on, it’s basically a FREE GIFT from Uncle Sam. How many great moments or memories can you “buy” with this gift of $8000?

One more: $8000 untouched in a conservative investment (like Savings Bonds) at 6% would compound to more than $25,000 in 20 years to help pay for college, a wedding or a car. In 30 years, when you retire, it would blossom to more than $46,000! That’s a lot of trinkets for your grandchildren.

Remember, this is money you didn’t need. This is money that didn’t provide sufficient incentive to force you to BUY NOW. Don’t be silly, take the money and enjoy it! Save monthly, improve your home, improve your lifestyle, or improve your future. Any way you look at it, $8000 can go a long way.

POSTED BY: Michael Ardolino AT 05:51 pm | Permalink | 0 Comments | E-mail this

Realty Connect USA logo

Michael Ardolino
Team Ardolino/Realty Connect USA
764 Route 25A
Setauket, NY 11733
Office: 631-941-4300
Direct: 631-941-6262
Fax: 631-675-1857
Email: Michael@Ardolino.com

All content contained on this site is owned by Michael Ardolino and is protected by the United States Copyright Act, which protects against copying, and other laws, such as the Federal Lanham Act, which protect against unfair competition. Any person copying materials from this site for a purpose not specifically permitted as set forth below will be prosecuted to the full extent of the law.

Realtors and potential homebuyers are free to use the content of this site and to make copies of materials or any portion thereof strictly for the purpose of informing themselves regarding homes and properties depicted or described on this site in connection with the bona fide interest of themselves or their clients in purchasing one or more of such homes or properties. Each copy made in accordance with the foregoing permission must faithfully reproduce all copyright notices, trade or service mark symbols and tag lines, as well as Michael Ardolino’s trade or service marks, logos and trade name so that any person receiving such material will be aware of the source of the materials and be aware of the rights being claimed by Michael Ardolino. All other copying, use and distribution is strictly prohibited without the express written consent of Michael Ardolino. IN NO EVENT SHALL THE COPYING OF ALL OR ANY PORTION OF THIS SITE FOR THE PURPOSE OF POSTING OF SUCH MATERIAL ON A COMPETITOR’S WEBSITE BE PERMITTED, NOR SHALL ANY COMPETITOR USE ALL OR ANY PORTION OF THIS SITE IN CONJUNCTION WITH ANY PUBLICATION, INCLUDING WITHOUT LIMITATION FLYERS, BROCHURES AND ADVERTISEMENTS.

The United States Copyright Act provides for statutory damages, compensatory damages and the award of attorneys fees in an action for infringement. Statutory damages can be as high as $50,000 per copy. It further provides for vicarious liability, which means that any person who has control over the infringing activity and stands to profit from it can be held liable, and that such individuals cannot escape liability by engaging in the infringing activity through corporations or other entities designed to limit liability to the owners and employees, such as limited liability companies.

The Lanham Act provides for treble (triple) damages for passing off the products and/or services of another party so as to create confusion over the source of the product or service, or implies that such other party has endorsed the product or service. Michael Ardolino also considers the trade names and tag lines in this site to be trademarks or service marks for his real estate sales business, and holds the look and feel of this site to represent trade dress, which distinguishes his real estate agency from others operating within the geographic regions served by Michael Ardolino’s real estate agency.

PRIVACY POLICY
Michael Ardolino is the sole owner of the information collected on this site. Neither Michael Ardolino nor the team associates will sell, share, or rent this confidential information to others. Your privacy is the primary issue for Michael Ardolino.

CONTACT POLICY
By submitting personal information such as name, address, phone number, email address and/or additional data, the client/prospect gives permission to Michael Ardolino or his authorized representatives to contact client/prospect by phone, U.S. Postal System, or email. Permission extends whether or not client/prospect is participating in a state, federal or other "do not contact" program of any type.

Real Estate Website Design &
Real Estate Marketing Services Provided by:

Site Powered By
prostepmarketing.com
Online web site design