The excitement of buying your first home fills your stomach with the flutters of the butterflies that will flit around your new window boxes. But even more than that, the perks of being a first-time home buyer add a whole new level of excitement to the process. A bit of work will be required to claim them, but do not miss out on these benefits of buying your first home.
Special Loan Programs
Often lenders offer first-time home buyers a loan intended to make home buying quicker and less expensive. Characteristics of these home financing options include low down payments, subsidized interest and limited lender fees. These reduced costs are available with the assistance of HUD. This organization insures mortgages, so the bank takes on less risk.
Low down payments
While a standard home loan may garner a 20 percent down payment, new homeowners may find rates as low as 3 percent or even nothing. Lack of equity in a current home and possibly less credit history for home buying newbies could raise required down payments. However, for those just starting out, HUD-secured lower down payments make homes more accessible.
Consider it a gift. With subsidized interest, your interest payment is covered by a third party. Yes, it is paid for you. Often the government assumes the role of the third party. However, charities, organizations and individuals may also assist in making homeownership a reality for first-time buyers in this way.
Limited lender fees
HUD also limits fees that lenders add to guard against loan risk. With the backing of HUD, banks feel more secure and reduce their fees. Again, this makes the overall cost of a home more affordable for first-time buyers.
The perks continue at tax time. While many tax benefits of homeownership exist in general, deducting points apply to new homeowners. The points represent the prepaid interest that you provided upfront to receive a better mortgage rate. Those points equal a tax deduction in the year you pay them if you qualify. The list of criteria to qualify is long, but includes that points must apply to a loan for your main home and to either buy or build the home.
Of course, there are qualifications for each of these perks. For instance, typically first-time buyer programs apply to a primary resident purchase in good condition and without safety issues. Also, a limit to the value of the home you intend to purchase exists. However, for those eager to enter the world of home ownership, these first-time buyer perks carry a greater promise of maintaining mortgage payments and a quicker payoff.
First time home buyer? Explore the perks you may qualify for by contacting one of our Loan Officers today!