My Rant Against the First-Time Home-Buyer Moron Credit

This rant is coming from someone who took the first-time home-buyer credit for purchases in 2008, which for those unaware is $7500 that has to be paid back over 15 years (approx $500/year) with no interest. And I took it to pay off interest accruing debt now, so I could work on the non-interest accruing debt over time.

The difference is I didn’t -buy- a house to get the credit. I decided to buy a house before I even knew about the credit, and because my father and I were homeless.

Now I know a couple people that are considering buying a house now because they heard that the Senate was proposing that first-time home-buyers of 2009 would get a $15,000 tax credit that they wouldn’t have to pay back. And the reason they want this credit is to either 1. pay their debt or 2. because it’s free money, and we know people like to jump on free money, whether they need a house or not.

To the #2 people, are you freaking kidding me? You’d go over $100k in debt just to get a quick $15,000? It’s like a $15,000 discount on your purchase price.

To the #1 people, this is not the way to go about paying off your debts. You’re creating $100,000-$200,000 worth of debt for a quick-fix on your current debts. On top of that, you’re going to need at least $5,000 cash up front for the down payment, and another $10,000 in closing costs. You MAY be able to get the seller to cover the closing costs like I did, but you also -may not-. So where are you going to come up with $5,000 to put down on your house? Where would you get $15,000 to put down on your house in order to get this $15,000 tax credit?

And lets say you can come up with the $5,000 to put down on the house, instead of using it to pay off your debts that you’re wanting the $15,000 for anyway. You don’t get that money until January of 2010 anyway, and you only have until August to buy the house. So how are you going to afford all of your debts -and- a mortgage for almost half a year before you get this $15,000 relief for your debts?

Can you afford 6 months worth of mortgage on top of all your current expenses and debts?

The bottom line is, if you weren’t good with money -before- you got the credit, you’re not going to be good with money -after- the credit. It doesn’t matter if you’ve paid off all your debts or not, now you have a 30 years worth of debt in the form of a home mortgage. And people who can’t handle money should not jump into a home mortgage without making lifestyle changes first.

Incidentally the Senate and the House have currently agreed to change it to $8k, and unlike my 2008 credit, the 2009 credit doesn’t have to be paid back.

Personally I’m against the credit in general because I think the government is just fucking everything up anyway by borrowing money from our grandchildren to try and get us to spend more money, and save companies that had no business being companies anyway if they can’t handle their own finances.