In part one of this series, we presented loan options that didn’t require the standard 20% cash down payment as alternatives that allow you to put down less than 20%. There are also plenty of other down payment-saving tips and down payment grants available through the more than 1,500 mortgage assistance programs throughout the country to get you into your first home sooner.
There are many loan programs and grants that cater to first-time home buyers, especially on the state and local levels. While a person who has never owned a home before certainly counts as a first-time home buyer, those who have owned a home before can also qualify as first-time home buyers under certain circumstances.
Under FHA Guidelines, any person who has not owned a principal residence in three years qualifies as a first-time home buyer. It does not matter if the previous home was sold or foreclosed on. It also does not matter if the person has recently owned an investment property.
This definition is very important because it provides a way for people to re-enter the housing marketplace. Please discuss these loan options with your loan originator.
The benefits available through mortgage assistance plans vary. For example, borrowers may be able to get financing at below-market interest rates. Down payment grants may be available, essentially meaning that little or nothing down will be required.
Or, you may be eligible for tax credits. Mortgage interest is generally tax deductible, but a "tax credit" is even more valuable. With what are called "mortgage credit certificates" or MCCs, borrowers can deduct directly from their actual tax bill. For instance, if you have $8,000 in mortgage interest you might be able to directly reduce your taxes by $1,600 while the remaining $6,400 can be treated as an itemized deduction. It is important to discuss the details with your tax advisor to understand your specific options.
Another important point about mortgage assistance programs is that many are designed to encourage local home purchases by public-sector employees such as teachers, police officers, firefighters, nurses, and corrections workers. There are millions of people who qualify for such assistance.
Low interest rates, and a rebounding housing market in many regions of the country, make this a terrific time to consider entering the real estate market. With today's financing choices, many buyers can be in their own home quickly.
Happy house hunting!