Lots of folks have been asking me whether the much-touted first-time homebuyer tax credit is worth taking.

“I’d like to see you write a follow-up on who should take advantage of this credit,” wrote Liz Kiser, who lives in Oklahoma. “Being that it’s a loan, it obviously isn’t going to be economical for everyone.”

Kiser qualifies for the tax credit, which was established recently as part of the Housing and Economic Recovery Act of 2008. The law authorizes the credit up to $7,500 for qualified first-time buyers purchasing homes on or after April 9, 2008, and before July 1, 2009. The catch is that you have to pay the money back to the Internal Revenue Service over 15 years.

Take Kiser’s situation. She’s single. She bought her first home in April.

“I am not in any way struggling to pay my mortgage, and I don’t have credit card debt,” she wrote.

So should she take advantage of this loan anyway, she wanted to know.

Certainly the terms are appealing. You can pay the money back in equal yearly installments, and the government isn’t charging interest.

I’m very concerned about how this tax credit will be marketed.

I’m sure it will be pushed as if it’s a no-brainer. Why wouldn’t you take “free” money, borrowers will surely be told.

That’s how an interest-free loan is often sold – as if there is no downside to being in this type of debt. But this loan has to be repaid to the IRS. Fail to pay and you’ll get hit with the same penalties and fees associated with any outstanding tax debt, according to IRS spokesman Eric Smith.

Many borrowers won’t focus on the fact that this credit is really a long-term loan. And I doubt many builders will play up that fact, either.

But let’s get back to Kiser.

She still was uncertain about taking this credit. So I asked her some questions.

If someone knocked on your door and said, “Hey, I have $7,500 to lend you at zero percent interest, and you can pay me back over 15 years,” would you take the money?

“Probably not, unless I had something specifically I needed the money for,” Kiser said.

OK, so what if you do need a lawn mower or furniture?

Would you take out a 15-year loan – even at zero percent – to pay for those items?

“No, I wouldn’t,” she said. “I would save up the money.”

Kiser then wondered how she might feel if she sold her home in the next several years.

Under the provisions of the law, if you sell the house before you pay off the loan, the entire amount becomes due. You pay back the loan from any profits of the sale. Upon reflection, Kiser didn’t like the idea that she would be saddled with having to hand over a lump sum of equity under that condition.