In a previous blog I talked about the first time home buyer tax credit of $7,500.  It is called a tax credit but it is really a 0% interest installment loan given by the federal government, which you repay $500/year over 15 years.  But there is talk of this credit not being repaid (a true credit) and the deadline to purchase a home extended to December 31st, 2009.  Take a look at the full article from Startribune.com.  Check back here for updated info about this tax credit.  This is a fabulous opportunity for you first time home buyers!

Yep that’s what I said $7,500.  The US Government will be giving first time homebuyers a $7,500 tax credit.  Well sort of a credit, you will have to repay $500/year for 15 years.  This is one of many ways the government is trying to stimulate the economy and have consumers spend more.  But let me tell you a couple ways you can spend that. 

1.  Invest $5,000 towards your IRA, then put 2,500 in an emergency savings account, you never know when you’ll need to replace a water heater or furnace.

2.  Payoff student loan debt,  there is nothing better than knowing that all that knowledge is debt free.

3.  Buy a used car cash, yes no car payment!

4.  If you have kids, put it towards their college fund, so they won’t need to do the second in this list.

5.  Pay off credit card and unsecured debt.  The average household has some $8.000 in credit card debt, as reported by MSN money.

6.  Put it towards your principal on your mortgage.  If you buy a 150,000 home in February 2009 and put the money towards your principal in February 2010 you will save over $36,000 in interest and take almost 4 years off your loan.  Wow that is a savings.

Just remember that to be a first time home buyer you just need to not have owned a home in the last three years.  For more information check out http://www.federalhousingtaxcredit.com/.  Remember you need to buy by July 1st 2009, so act soon.