Take Advantage of These First-Time Home Buyer Benefits

Take Advantage of These First-Time Home Buyer Benefits

The US Department of Housing and Urban Development defines first-time home buyers as
 
  • Anyone who has not owned a residence for the three years prior to purchasing a new home.
  • A person who never owned a residence, even if their spouse owned a home.
  • Single parents who owned homes with ex-spouses.
  • Displaced homemakers who only owned property with a spouse.
You are also identified as a first-time home buyer if you own a structure that does not meet building codes and you intend to build a new structure in its place.
 
If you’re a first-time homebuyer of Orange Beach real estate, you’re eligible for several benefits.

Mortgage programs


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A quick internet search will show that almost every bank in the US can provide access to a first-time homebuyer loan program. There are also many companies that do nothing but provide mortgage loans at varying rates. Many of them have highly competitive rates, specifically for first-time homebuyers.
 
Further, first-time homebuyer loans have several advantages. These programs aim to ease financial limitations and guide new homebuyers through a process that can be confusing. Many of these programs are sponsored by banks and credit unions and can offer large perks, such as small down payments, low to no limitations on income, and the ability to make electric mortgage payments.
 
Several online calculators can help you budget your mortgage ahead of time and give you an idea of how a new home purchase will impact your financial situation.

Tax benefits


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There are several tax credits that you can receive as a first-time home buyer looking for homes for sale in Orange County. However, you must meet certain requirements to receive them. On a federal level, there is a Mortgage Interest Credit available to homeowners if they have been issued a Mortgage Credit Certificate locally. This credit allows homeowners to convert $2,000 of their mortgage interest from a specific year into a non-refundable tax credit.
 
You can also investigate the Residential Energy-Efficiency Property Credit. This tax credit is also nonrefundable and is issued for up to 26% of the costs associated with eligible qualified energy-efficient equipment to upgrade your home. Some states also offer tax credits and incentives to new homeowners.
 
Every state has a different program, but many offer tax credits for renewable energy and property tax relief. More states are also letting individuals contribute to state-authorized savings accounts in which your yearly deposits are then deductible on your state returns.
 
All fifty states offer specific first-time homebuyer programs. Each state has a specific set of rules and requirements to qualify for these programs, which usually provide loans, grants, or assistance with down payments or closing costs.

Reliable monthly payments


The majority of first-time homebuyer loans tend to be fixed-rate mortgages. A fixed-rate mortgage has a rate that does not change for the entire lifespan of the loan. The benefit of a fixed-rate loan is that you can guarantee that your monthly payments will not change unless you choose to refinance at some point in the future.
 
You can also apply for a floating-rate mortgage, such as an adjustable-rate mortgage or an interest-only mortgage. These loan types allow you to qualify for larger amounts of money than a fixed-rate loan. However, the monthly payments will slowly rise throughout your loan. These increases are typically capped at a certain point and will save you money initially, but they will increase during the later period of your loan.
 
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Even with an adjustable-rate mortgage, you still have the security of knowing exactly how and when your payments will increase. You will not be living with the unpredictability that comes when renting a property or an apartment. And once you pay off your mortgage, you will own the house so you can consider your payments an investment.

An appreciating asset


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Buying a house may be the largest investment you have made to date. The good news is that it is an investment that should gain appreciation. While the rate at which a house will appreciate is entirely outside of your control, you can do a few things to push the odds more in your favor. Be aware of market trends while buying your house. Lower demand equals slower appreciation while increased demand will cause houses to appreciate quicker.
 
Keep in mind that location is a key factor in appreciation as is the quality of your house in general. You cannot control the fluctuations of the economy, but you can keep your home in optimal condition. For example, fully upgrading your kitchen can earn a 54-59% return on investment, while upgrading floors, insulation, basements, or closets can net even higher amounts.

A retirement investment


Investing in real estate has been considered a safe long-term investment when compared to more volatile investment strategies such as stock purchases. Real estate tends to add financial stability in the long term. As you approach your retirement years, you can use your house as a vacation property, sell it to cash in on the appreciation, or use it as a rental property. Choosing to sell your home and move into a smaller unit later on lets you make and save money both.

Getting started


First-time homebuyers have many reasons to be both excited and apprehensive when searching for a new home. Many factors go into deciding exactly how to mortgage your house, but the good news is there are many benefits to becoming a first-time home buyer. One way to ensure a smooth real estate transaction is to hire a trusted real estate agent who can guide you through the legal information and financial data that are part of the home buying process.
 
The Orange Beach real estate market is exciting and competitive; you’ll need someone by your side as a first-time home buyer. Whether you are interested in Orange Beach homes for sale or an Orange Beach condo, Leigh McPherson can help. Contact her when you’re ready to get started.

*Header photo courtesy of Pexels




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