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Starter Home: A Guide To The Many First Time Home Buyer Benefits You Can Take Advantage Of

August 23, 2018

Are you gearing up to purchase your first home?

It may seem a bit confusing–what with all the appointments to attend, emails to send, and documents to sign.

In the middle of the chaos, it can be easy to overlook the many first time homebuyer benefits available to you.

These benefits can mean a smoother purchase overall. They can also lead to a more comfortable financial future if you play your cards right.

In this post, we’ll take a look at all of the homebuyer benefits you won’t want to miss!

  1. Do Your Research

    Before we even jump into the many benefits that exist for first time homebuyers, let’s talk about preliminary steps.

    Knowledge is power when it comes to purchasing your first home. If you do your research well, you’ll be able to take advantage of everything you’re entitled to.

    Start researching well before you decide on a real estate agent or a lender. Lending programs, in particular, will offer different rates and terms for first-time home purchases.

    Some may offer 12-month interest-only construction loans, for example. Others may tender competitive interest rates for fixed 15-year mortgage plans.

    Identify your first-time home needs and use them as a foundation for your research. Keep your budget in mind in addition to comparable home prices in your geography.

    Chat with friends and family members about their experiences buying a home for the first time and what benefits they took advantage of.

    Familiarize yourself with the language of home purchases. Brush up on what it means to take out a mortgage, what interests rates and closing fees are, and more.

  2. Investigate First Time Homebuyer Loan Programs

    First-time homebuyers have a lot of programs available when it comes to financial assistance. These programs are a big help, but a lot of homebuyers aren’t aware of them.

    If you feel your income can’t account for a home loan, but you’re eager to purchase a house, look into homebuyer loan programs. They top the list of first time homebuyer benefits.

    Visit the U.S. Department of Housing and Urban Development to browse for loan and grant programs by state. You may be able to make a case for financial aid and receive assistance in purchasing your home.

    This assistance can take the form of smaller down payments, reduced or eliminated fees, deferred payments, and even loan forgiveness.

    Keep in mind these programs have strict eligibility regulations. Make sure to read them thoroughly before applying.

  3. Understand the Applicable Tax Incentives
    When you file your taxes after your first time home purchase, you’ll be privy to some fantastic deductions. These first time homebuyer benefits can be a financial asset.

    Keep in mind that the tax code for homebuyers and owners keeps changing in the U.S. Consult your accountant for details on current deductions and trends.

    Home Mortgage Interest Deduction
    It’s one of the best first time homebuyer benefits when it comes to financial incentives.

    Most first-time homebuyers will benefit from this deduction because of its specifications. Namely, to deduct all interest paid on your mortgage, your home loan has to be for less than $1 million and secured.

    When you pay your mortgage the first few years, you’ll likely spend more on interest. You can get massive deductions in the first few years of owning your home.

    PMI Deduction
    When you purchase a home for the first time, you may be required to purchase Private Mortgage Insurance. In fact, first-time homebuyers may not be able to escape this cost given the fact that they are new borrowers.

    Depending on your annual income, you may be able to deduct all PMI payments you make for your home.

    The stipulations on this deduction keep changing so be sure to check with your accountant when filing.

    Points and Real Estate Taxes Deduction
    If you pay any real estate taxes on your purchased property, whether out of your pocket our escrow account, you can claim these as a deduction.

    Similarly, if you’ve prepaid interest or purchased ‘points’ before buying your home for the first time, you may be able to deduct these.

  4. Chat With a Loan Officer
    One of the best ways to review all of the first time homebuyer benefits at your disposal is to consult an experienced loan officer.

    It’s important to chat with a loan officer in addition to your accountant or tax attorney. This way you can maximize benefits for when you’re filing taxes and for your mortgage terms.

    A loan officer can advise you on down payment amounts, term lengths, and more. They can help you make the purchase that can save you the most down the road.

  5. Keep An Eye on the Future
    Other first time homebuyer benefits keep the future in mind. For example, if you eventually sell this first home, you may not have to pay taxes on portions of your capital gain.

    You may also be able to receive funding for home improvement and upgrades. What’s more, if you wish to make your new home more energy efficient, you may be able to receive financial aid to do so.

    Lastly, note that purchasing a home for the first time can make your other tax deductions more valuable. You’ll have to itemize your deductions, and most homeowners surpass the federal standard deduction.

    First Time Homebuyer Benefits
    Planning to purchase your first home doesn’t have to be a financial stretch. You can take advantage of many first time homebuyer benefits today.

    Consider applying to first time homebuyer loan programs. Familiarize yourself with the available tax deductions for new homeowners, and consult a loan officer to ensure you’re securing the best deal on your mortgage.

    Remember that some benefits can occur years down the road through home improvement and eventual resale.

    At Manasquan Bank, we are here to help you identify the home loan that will be most beneficial for you and your needs.Start a conversation with us today so that we can help you get closer to your dream home!


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