How to Apply “Free Money” Wisely Toward a Home Purchase?
February 22, 2009 · · 5 Comments

In my previous blog, “Stimulus Package – What It Means to Bay Area Homebuyers”, some prospective homebuyers and comments  have expressed that the $8,000 tax credit in the Stimulus Package is “just not enough” to stimulate them to get off the fence.  Understandably, the incentive seems too insignificant when we are talking about an average housing price of $500,000 in the Bay Area. 

On the flip side of the coin, $8,000 is unarguably a substantial amount of money – don’t we all wish to have an extra $8,000 in our bank account?  Since a tax credit is a dollar for dollar reduction in income taxes (e.g. if you have $8,000 tax credit, you will pay $8,000 less tax that year regardless of your tax bracket), it is essentially like “free money”. Therefore, for someone who intends to purchase a home this year, there could be a number of ways in which this money can be wisely applied toward the purchase.  Here are some examples: Read more