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first time homebuyer credit

Should You Pay Off Your Mortgage Early?

Apr 4th, 2014
by sraskie.
12 comments

As individuals pursue the American Dream of buying their first or next home the question may arise on whether or not it’s a good idea to pay down the mortgage and have no mortgage debt or pay the normal monthly payment and invest the extra money that would have gone to pay down the mortgage early in a place (the stock market) that offers the potential for higher returns over the long run. There are many fierce advocates for paying off debt, any debt early. While this is a wise choice regarding high interest debts such as credit cards, student loans and other high interest loans it may not necessarily be the case for home mortgage debt. Here’s a situation where for some folks it may make sense to pay down early and for others they may wish to consider invested the extra money elsewhere. Generally, the younger a person […]

APR vs. APY

Jan 14th, 2013
by sraskie.
2 comments

Question: I am thinking on saving money in a 3 year CD paying .28%. The bank brochure is telling me I’ll get .28% APR, but there’s another word in the brochure that talks about APY. What’s the difference? Good question! APR (Annual Percentage Rate) is what you see on the “face” of the account. Example: If I invest $1,000 in a 1 year CD that pays 5%, the 5% on the brochure at the bank means APR. So I’m led to think that I’ll make 5% ($50) for the year for a total of $1,050. APY (Annual Percentage Yield) takes into account how often that interest rate is credited. Meaning does it credit a portion of that 5% monthly, semi-annually, or annually? If it’s annually, you’ll still get the 5% or $50. If it’s semi-annually, you’ll get credited 2.5% every 6 months. This is a bit better since you can […]

A Restriction on the Home Buyer Credit

Mar 21st, 2011
by jblankenship.
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Here is a case where, even though the IRS documentation did not state it directly, the real rule of the law makes an explicit statement, and therefore the Code is where the final rules are taken from. In this particular case, there is a situation where the home buyer credit is not available: if the home is purchased from a parent or another close relative (and vice versa). And the taxpayer who relied only on an IRS publication found out the hard way that the Internal Revenue Code is the final word on the subject. There was a recent Tax Court case (Nievinski, TC Summary Opinion 2011-10) that challenged the limitation, and the Tax Court ruled in favor of the Service.  The argument was that, in a particular document, IRS Publication 4819 “Important Information About the First-Time Homebuyer Credit”, there was no express explanation of this limitation. Image via The […]

7 Tips About the First-Time Homebuyer Credit

Mar 6th, 2010
by jblankenship.
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The First-Time Homebuyer Income Tax Credit has been really popular with lots of folks – and there is still time to take advantage of it.  As you may be aware, the name of the credit is misleading – it’s been expanded to include folks who owned a house for a significant period of time and have purchased a new home during the prescribed period as well. Like all tax provisions, this is one that you have to pay particular attention to the details, otherwise you could miss out on the credit.  Following are seven facts that the IRS wants you to know about claiming the credit (IRS Tax Tip 2010-27). Seven Important Facts About Claiming the First-Time Homebuyer Credit You must buy – or enter into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010.  If you have entered […]