Part of the Housing and Economic Recovery Act of 2008 is a tax credit for first-time buyers purchasing a home between April 9, 2008 and July 1, 2009. The government will hand over up to $7,500 to you, if you qualify. The catch is that you have to pay back the IRS over the next 15 years.

The deal sounds pretty good on the surface. Sure, the money is really a loan, rather than a tax credit. But you get a whole 15 years to pay it off and there’s no interest. But is that free money really a good choice?

The National Association of Home Builders certainly thinks you should take the credit. If you look at their home page, you’ll see that they’re describing the temporary tax credit as “the opportunity of a lifetime.” The government did create the tax credit, after all, to boost sales of both existing and new homes. NAHB’s membership has had a rough year, too.

But just because a loan is interest-free doesn’t mean that you should take it. If you can’t afford to pay back a loan, you shouldn’t take it. It doesn’t matter how good the terms are. After all, you’ll be making mortgage payments as you try to pay back your ‘tax credit.’ If you miss a payment or don’t repay the loan, you’ll get hit with the IRS’ standard penalties and fees for outstanding tax debt. That’s 0.5 percent each month just for the penalty, and there is no maximum penalty. On top of that, the IRS charges another 5 percent per year on unpaid taxes. It just gets scarier and scarier.

There’s another catch that comes with the tax credit: if you sell your new house, the balance becomes due immediately. If you buy a house now, do you really think you’ll be in the same house 15 years from now? You may think so, but statistics say no. You’ll probably be moving in the next six years or so.

You can’t just move what you owe on your tax ‘credit’ over to a new home. The IRS expects you to pay off the balance out of your profits from the sale. If your sale isn’t profitable enough to cover it, the money comes out of your pocket.

Now that I’ve scared you with all the details of the the temporary tax credit, though, I’d like to say that it’s not necessarily a bad deal. If you really do need the money, this loan has much better terms than adding to the debt on your credit card. If you wound up in a mortgage that is less affordable than you thought and you qualify for the tax credit, I’m all in favor of taking it. Pay down your mortgage with the money. Yes, you’ll still owe that $7,500, but there won’t be any interest accruing on it.

It’s really a question of whether you need the money — not want it. Don’t take the credit if you plan to use the money for anything that loses value. But if you plan to use it for paying down debt or something similar, go for it.