A Perfect Storm for First Time Buyers
First Time Buyers
August 10th, 2008
A Perfect Storm for first time buyers has arrived. Currently we are experiencing a combination of depressed housing prices and affordable financing that will most likely not last much longer. Already there is pressure to raise interest rates. Keep in mind that an increase of only 1% in interest rates can increase your total monthly payment by approximately 8% and decrease your purchasing power by many thousands of dollars. For example; at 6% the total monthly payment on a $200,000 home using FHA 97% financing including property taxes and homeowners insurance would be about $1,564. At 7% the same purchase has a monthly payment of about $1,691.
If you are renting right now both those figures may sound high to you. Actually, there not as high as you might think. There is a hidden cost to rent that you may not know about and a huge tax incentive to buy before June 30, 2009 that you need to know about.
Did you know that buying a home for $200,000 using FHA financing could result in a monthly income tax savings of about $300 for the average first time home buyer? That’s a $3,600 reduction on your annual income taxes! Need a raise to make the monthly payment? Because of these tax savings you may be able to adjust your W4 withholding and increase your take home pay to put towards your monthly house payment.
You have a short window of opportunity to take advantage of up to $7,500 in interest free money that must be used before June 30, 2009. This money is available interest free as part of the recent home-purchase tax credit created by the new housing bill.
Contact Us for an easy to use rent vs buy calculator and more information on first time buyer opportunities.
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