The Advantages of Being a First-Time Home Buyer

Buying your first home can be intimidating, but a first time home buyer has many advantages when shopping for a mortgage. The benefits can range from simple, practical concerns to monetary incentives.

Lack of Existing Loans

You do not have to concern yourself with selling an existing home. This makes your home search and loan search much easier. When you have an existing mortgage, you will need to assure you sell your home at a high enough price to cover the remaining loan amount. You will also have to buy a home according to when your home sells. Buy a home too early, and you are stuck with two mortgages. Wait too long, and you will not have a place to live. This is not a concern for a first time buyer, and this flexibility gives you a huge advantage. You will be able to walk away from a mortgage or sale negotiation that is not going your way.

FHA First Time Home Buyer Incentives

The Federal Housing Authority provides a First Time Home Buyer Program that allows for low interest rates, low down payment requirements and credit assistance. The government has always taken an interest in allowing people to achieve the goal of home ownership. One way to do this is to make a first home purchase affordable and accessible, and these programs aim to do just that. If you qualify for an FHA guaranty on your loan, your lender will have the assurance the government will purchase your mortgage if you default. This means they can assess a lower interest rate against you and provide you with better loan terms. Working with an FHA approved lender will allow you to get expert advice on how to qualify for an FHA guarantee.

Federal Tax Deductions

Periodically, the government will offer a tax deduction just for buying your first home. This was true in 2009, when the government was aiming to stimulate the housing market by encouraging purchases from first time buyers. Even after these limited incentives are removed, though, there are other deductions you can take advantage of. Your mortgage is tax deductible, and many of your private mortgage insurance costs may also be deductible. Home buyers may be surprised to see owning a home is less expensive than renting. In some cases, they may even save money through the purchase.

Local Incentives

If the federal incentives are not enough to make your loan affordable, you can look into local incentives offered by your city and your state. Often, when a city is attempting to revitalize a neighborhood, they will offer loan guarantees to individuals hoping to purchase homes in that area. They may also offer local tax deductions, reduced water and trash fees, and other measures to make your move affordable. These programs are usually directed at first time home buyers who need the assistance to a greater degree. Ask your lender about local programs for first timers, and you may be surprised to learn there are as many locally as there are nationally.