Benefits of $8,000 tax credit, record-low interest rates


Benefits of $8,000 tax credit, record-low interest rates
By Scott Rogers • March 23, 2009
Let's assume for a moment that a first-time buyer decides to buy a $150,000 townhouse in Harrisonburg. With the appropriate income and credit scores, they may be able to obtain a rate as low as 4.625% on a 30 year fixed rate mortgage, with no downpayment. In the first year, this first-time buyer would likely have the following income and expenses: - $3,500 on closing costs - $952/m on mortgage payments (principal, interest, taxes, insurance, pmi) + $8,000 tax credit + $1,400 tax savings from interest payments That is a total net cost of $5,524 in the first year of homeownership. Contrast this to a buyer who closes on December 1 of this year. At that point, the tax benefit will have ceased, and I predict that rates will be at least as high as 5.75% on a 30 year mortgage. - $3500 on closing costs - $1,056/m on mortgage payments (principal, interest, taxes, insurance, pmi) + $1,725 tax savings from interest payments This is a total net cost of $14,447 in the first year of homeownership. The combination of the tax credit, and the extremely low interest rates we are currently experiencing are likely to save you almost $9,000 in the first year of homeownership. As you can see, much of the above $9,000 of savings is in the $8,000 tax credit for first time buyers --- but the additional savings because of a low interest rate becomes quite dramatic over the course of the loan. Buying now at very low rates (4.625%) may save you as much as $37,000 over the next 30 years as compared to buying at 5.75%. A $150,000 purchase financed over 30 years at 5.75% will result in $165,129 paid in interest. If had been financed over 30 years at 4.625%, you would only paid $127,635 in interest. Receive Updates by Email Recent Articles: There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell Consider The Cost Of Your Planned Renovations When Planning Your Offer
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 21, 2024 (unless otherwise noted).
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