No joke. I recently received a check for $8,000 from the U.S. government. It’s now sitting in my bank account. All I had to do was buy a house. Maybe you could do the same thing.
As part of his economic stimulus package, President Obama decided to offer first-time homebuyers an income-tax credit of up to $8,000. Being 19 years old, I’ve never owned a home, and my income is below the $75,000 cut-off, so I’m eligible to grab the credit. It’s based on 10 percent of the purchase price. My house, a solid three-bedroom colonial built in 1917, cost me exactly $80,000 and so I was able to max out the $8,000 credit.
The best part about the credit is that it is “refundable.” That means you get a check for anything over and above your income tax liability.
The deal here is that I have to use the house as my residence for at least three years. If I do that, I get to keep the eight grand. If I don’t, I have to pay it back to the government. But it should all work out. I’m less than two miles from my college campus and if all goes according to plan, I’ll graduate in 3 years and be free to sell the house and keep my stimulus money along with any appreciation in value.
In the meantime, I have my own spacious crib, which to me is a lot better than the 30 square feet of space they call a college dorm room. I’ve invited a couple of my friends to move in and share costs.
You may be wondering where I came up with the money to buy the house. After all, no bank is going to give a full-time college student a mortgage. This is where parents come in. Mine were willing to take out a home-equity loan on their own house and re-lend the money to me. I pay my parents about $400 each month, including interest, just as I would pay a bank on a 30-year mortgage. I also have to keep the $8,000 in a separate account as added “security” for them.
Owning a house looks to be cheaper than on-campus living, at least in my situation. My college charges $6,550 for a bed in a dorm room, and that’s just for an 8-month school year. The total of my mortgage payments, property taxes, insurance, and repairs and maintenance should come in lower than $6,550 after figuring in what the housemates are kicking in. What’s not to like?
If you are interested in this idea, you’ll have to act fast. The credit is available only for home purchases completed before December 1, 2009. If you cannot get a bank or relatives to give you a mortgage, your other option is to request “seller financing.” (But most sellers are not willing to do that.) You can get more information about the credit from the IRS website.