Client Talking Point
Mr. / Mrs. Jones,
I understand that you were looking to buy a home but were discouraged because you didn’t find one in time to take advantage of the $8,000 tax credit?
By not taking advantage of the tax credit you saved much more than $8,000.
Can I explain?
In March and April of this year (2010), when the tax credit was available, interest rates were around 5.25%-5.5% on a $417,000 conforming loan. Today… interest rates are much lower… in fact, they are anywhere from 4.25-4.5%. This means that you’re saving 1 full percent!
Let’s assume that today you purchased a home and took out a mortgage for $400,000, with the 1% decrease in the interest rate, the first year alone you have saved roughly $4,000. After 2 years, you’ll have saved $8,000, the same amount of that tax credit.
Now, the best part of this is that every year, you’ll be saving $4,000! The average person stays in their home for 6-10 years. So, let’s say that you bought this home and lived in it for 8 years, you’d be saving, an extra $32,000, four times that amount of the tax credit!
Obviously, you agree that the current low interest rates will save you a lot of money, right? These low rates won’t last forever… now is the time for you to buy. Let’s set a time to get together, which is better for you… Tuesday at 4:00p.m. or Wednesday at 6:00p.m.?