First Time Home Buyer Loans – Joyful Beginnings
Adam Hefner asked:
During much of America’s history only the wealthy could afford home ownership. It was always referred to as the “American dream”. Today it has more transitioned from a dream or fantasy to an expectation. Home ownership is viewed by many as a given part of American life. What caused this evolution? It mainly was the availability of first time home buyer loans made possible by the Federal Housing Administration (FHA).
Prior to FHA loans lending standards were strict for all mortgages. For a brief window recently, many lenders greatly relaxed these underwriting standards. The result is seen in today’s headlines discussing waves of defaults and foreclosures. This has caused lending standards to quickly tighten again going back to what they used to be.
Lending standards relate to several aspects in which the borrower is reviewed. The first of these is a requisite minimum credit score. Unfortunately, many new buyers are too young to have established extensive credit. This served to keep this segment of would be buyers out of the home ownership universe.
FHA loans sought to address this by providing for a secondary market for loans without the required credit history. This opens the door to owning a home to many young families who otherwise would have had to wait years while developing sufficient credit history. Mortgages also traditionally required a 20% down payment.
Even for a modest $125,000 home this equates to $25,000. Many first time buyers did not have this amount saved yet. Requiring a full 20% down payment further delaying many first time purchases. FHA loans also address this problem. With an FHA backed loan the borrower does not have to come up with the full twenty percent at closing.
FHA loans only require 3% down payments. That $125,000 home can now be purchased with a down payment of $3750 putting it well within the reach of most anyone who desires it. Also reduced are closing costs and points. These are fees typically charged to the borrower and payable in full at closing. These fees each tend to be small but can add up quickly.
FHA loans allow for these fees to be cut in half. Furthermore, the portion still owed by the borrower can be paid over the life of the mortgage, most usually 30 years. This often translates to another few dollars a month on top of the normal payment. This again removes a former obstacle to first time buyers.
First time home buyer loans backed by the FHA are a wonderful creation for those just starting out and desiring to own their home. There are more details and requirements to be eligible for an FHA backed loan. Do the research to find out if you can benefit from this great program.
Stanley
During much of America’s history only the wealthy could afford home ownership. It was always referred to as the “American dream”. Today it has more transitioned from a dream or fantasy to an expectation. Home ownership is viewed by many as a given part of American life. What caused this evolution? It mainly was the availability of first time home buyer loans made possible by the Federal Housing Administration (FHA).
Prior to FHA loans lending standards were strict for all mortgages. For a brief window recently, many lenders greatly relaxed these underwriting standards. The result is seen in today’s headlines discussing waves of defaults and foreclosures. This has caused lending standards to quickly tighten again going back to what they used to be.
Lending standards relate to several aspects in which the borrower is reviewed. The first of these is a requisite minimum credit score. Unfortunately, many new buyers are too young to have established extensive credit. This served to keep this segment of would be buyers out of the home ownership universe.
FHA loans sought to address this by providing for a secondary market for loans without the required credit history. This opens the door to owning a home to many young families who otherwise would have had to wait years while developing sufficient credit history. Mortgages also traditionally required a 20% down payment.
Even for a modest $125,000 home this equates to $25,000. Many first time buyers did not have this amount saved yet. Requiring a full 20% down payment further delaying many first time purchases. FHA loans also address this problem. With an FHA backed loan the borrower does not have to come up with the full twenty percent at closing.
FHA loans only require 3% down payments. That $125,000 home can now be purchased with a down payment of $3750 putting it well within the reach of most anyone who desires it. Also reduced are closing costs and points. These are fees typically charged to the borrower and payable in full at closing. These fees each tend to be small but can add up quickly.
FHA loans allow for these fees to be cut in half. Furthermore, the portion still owed by the borrower can be paid over the life of the mortgage, most usually 30 years. This often translates to another few dollars a month on top of the normal payment. This again removes a former obstacle to first time buyers.
First time home buyer loans backed by the FHA are a wonderful creation for those just starting out and desiring to own their home. There are more details and requirements to be eligible for an FHA backed loan. Do the research to find out if you can benefit from this great program.
Stanley
How do you find out and qualify for the first time home buyer program through HUD?
Maria Gallercia asked:
I want to know about the first time home buyer grant assistance program where the federal government finance the down payment. Thank you in advance.
Lester
I want to know about the first time home buyer grant assistance program where the federal government finance the down payment. Thank you in advance.
Lester
What are the benefits of a first time home buyer loan?
Personalqs87 asked:
I am looking at a house for $100,000 and I was wondering if anyone that has just recently gone through something similar could let me know what kind of rate and length of a loan I might be able to get. Also what is different from a first time home buyer and other loans. If there is a difference.
Lawrence
I am looking at a house for $100,000 and I was wondering if anyone that has just recently gone through something similar could let me know what kind of rate and length of a loan I might be able to get. Also what is different from a first time home buyer and other loans. If there is a difference.
Lawrence
Are You a First Time Home Buyer? Here’s $7500……
Marlon Baugh asked:
Have you ever heard of the Housing and Recovery Act of 2008? Well today we are going to focus on one of the benefits, the $7500 First Time Home Buyer IRS Tax Credit.
Even with interest rates at historical lows and with a wide selection of discounted homes on the market, people still weren’t buying, so the government came up with this tax credit to stimulate and provide financial assistance for First Time Home Buyers to buy now rather than wait.
The $7,500 First-Time Home Buyer IRS Tax Credit only applies to first-time home buyer purchases of a primary residence between April 9, 2008 and July 1, 2009. It is important to understand that this is a TAX CREDIT and not a TAX DEDUCTION. Now a tax credit is a reduction in income taxes owed! In other words, when a buyer files their income taxes for the year the home was purchased (April 2008 – July 2009), they may be able to subtract $7,500 from the amount of federal income tax liability, which will either put more money in your pocket as you will get an increased tax refund or reduce the amount of tax still owed.
However, this tax credit is not FREE. Yes, this is not a hand out from Uncle Sam; it is a loan that has to be paid back. Repayment will begin 2 years after the credit is claimed, and must be repaid within 15 years. So that’s a $500 payment per year. It’s an interest-free loan for 15 years.
Now before you get turned off by this “LOAN,” lets take a look on the benefits this $7500 tax credit may provide. Majority of first time home buyers have walked away from the closing table with an empty savings and or checking account once the purchase of their home is complete. Now they have a home to decorate, furnish and in some cases repair and paint. Majority of these first time home buyers will now turn to their credit cards to pay for these expenses, which will come with pretty high interest rates. So when compared to have a credit card payment which comes with interest charges, versus and an interest free $7500 loan…..it now seems a little more attractive.
Now for those of you first time home buyers that are a little more well off financially, this can still benefit you….here’s how.
Let’s assume a $200,000 mortgage was needed in the home purchase at 6.0% interest rate fixed for 30 years. What if the $7,500 tax credit was a refund which you used to pre-pay the mortgage? Using simple math that would be an annual interest savings of $437.50; which is actually less than the $500 payment per year on the $7500 Tax Credit Loan.
The main benefit here is not just the payment savings but the outstanding mortgage balance will be reduced by $7,500 and each future mortgage payment results in savings in mortgage interest and increased reduction in principal mortgage. As each monthly mortgage payment go to reducing the mortgage balance and less is applied to interest. Together these savings will exceed the $500 cost of repayment of the tax credit. The benefit over the long term in interest savings and principal reduction will be quite amazing. Talk about good old Uncle Sam helping you payoff your mortgage early!
Lorraine
Have you ever heard of the Housing and Recovery Act of 2008? Well today we are going to focus on one of the benefits, the $7500 First Time Home Buyer IRS Tax Credit.
Even with interest rates at historical lows and with a wide selection of discounted homes on the market, people still weren’t buying, so the government came up with this tax credit to stimulate and provide financial assistance for First Time Home Buyers to buy now rather than wait.
The $7,500 First-Time Home Buyer IRS Tax Credit only applies to first-time home buyer purchases of a primary residence between April 9, 2008 and July 1, 2009. It is important to understand that this is a TAX CREDIT and not a TAX DEDUCTION. Now a tax credit is a reduction in income taxes owed! In other words, when a buyer files their income taxes for the year the home was purchased (April 2008 – July 2009), they may be able to subtract $7,500 from the amount of federal income tax liability, which will either put more money in your pocket as you will get an increased tax refund or reduce the amount of tax still owed.
However, this tax credit is not FREE. Yes, this is not a hand out from Uncle Sam; it is a loan that has to be paid back. Repayment will begin 2 years after the credit is claimed, and must be repaid within 15 years. So that’s a $500 payment per year. It’s an interest-free loan for 15 years.
Now before you get turned off by this “LOAN,” lets take a look on the benefits this $7500 tax credit may provide. Majority of first time home buyers have walked away from the closing table with an empty savings and or checking account once the purchase of their home is complete. Now they have a home to decorate, furnish and in some cases repair and paint. Majority of these first time home buyers will now turn to their credit cards to pay for these expenses, which will come with pretty high interest rates. So when compared to have a credit card payment which comes with interest charges, versus and an interest free $7500 loan…..it now seems a little more attractive.
Now for those of you first time home buyers that are a little more well off financially, this can still benefit you….here’s how.
Let’s assume a $200,000 mortgage was needed in the home purchase at 6.0% interest rate fixed for 30 years. What if the $7,500 tax credit was a refund which you used to pre-pay the mortgage? Using simple math that would be an annual interest savings of $437.50; which is actually less than the $500 payment per year on the $7500 Tax Credit Loan.
The main benefit here is not just the payment savings but the outstanding mortgage balance will be reduced by $7,500 and each future mortgage payment results in savings in mortgage interest and increased reduction in principal mortgage. As each monthly mortgage payment go to reducing the mortgage balance and less is applied to interest. Together these savings will exceed the $500 cost of repayment of the tax credit. The benefit over the long term in interest savings and principal reduction will be quite amazing. Talk about good old Uncle Sam helping you payoff your mortgage early!
Lorraine
FHA First Time Home Buyer Home Loans
Lorna Mclaren asked:
FHA first time home buyer home loans are exactly what the Federal Housing Association was initially created for. If you are a first time home buyer looking for a home buyer loan then the FHA may offer the ideal solution to your requirements.
Any first time home buyers find that the deposit is the hardest part of any home loan. These down payments can be as low as 3% of the purchase price and it is also possible to have the majority of your closing costs and fees included in your loan. The FHA first time buyer home loans are specifically designed to help first time buyers get their feet on the property ladder, especially when house prices are increasing at a far greater rate than wages.
Of course, there are certain requirements that borrowers need to meet before they are eligible for an FHA first time home buyer home loan. The majority of these loans are not available to first time buyers with a poor credit rating. The FHA also has various other credit qualifications that an applicant needs to satisfy to qualify for a first time buyer home loan.
An FHA first time home buyer home loan is usually available on properties that have up to four units but most first time buyers are not looking to go into property ownership for profit but rather for somewhere to live. The amount of money that a borrower can obtain is up to 97% of the total finance require to purchase the property but it is important to remember that the initial mortgage insurance premium must be paid separately in advance of the financing agreement.
Paula
FHA first time home buyer home loans are exactly what the Federal Housing Association was initially created for. If you are a first time home buyer looking for a home buyer loan then the FHA may offer the ideal solution to your requirements.
Any first time home buyers find that the deposit is the hardest part of any home loan. These down payments can be as low as 3% of the purchase price and it is also possible to have the majority of your closing costs and fees included in your loan. The FHA first time buyer home loans are specifically designed to help first time buyers get their feet on the property ladder, especially when house prices are increasing at a far greater rate than wages.
Of course, there are certain requirements that borrowers need to meet before they are eligible for an FHA first time home buyer home loan. The majority of these loans are not available to first time buyers with a poor credit rating. The FHA also has various other credit qualifications that an applicant needs to satisfy to qualify for a first time buyer home loan.
An FHA first time home buyer home loan is usually available on properties that have up to four units but most first time buyers are not looking to go into property ownership for profit but rather for somewhere to live. The amount of money that a borrower can obtain is up to 97% of the total finance require to purchase the property but it is important to remember that the initial mortgage insurance premium must be paid separately in advance of the financing agreement.
Paula
are cities still giving out first time home buyer assitance in this tough economy?
Dave asked:
i live in minneapolis area, are cities still doing down payment assistance for first time home buyers. If so whats the best way to find out.
Mildred
i live in minneapolis area, are cities still doing down payment assistance for first time home buyers. If so whats the best way to find out.
Mildred
Tax Credit for First Time Home Buyers
Lee Keadle asked:
Many buyers have been asking about the tax credit for home buyers coming up this tax year. Although this topic has gotten a lot of coverage in the news, people have gotten really confused about what it is. So, I wanted to clarify some of the misconceptions I’ve noticed when talking to home buyers.
The biggest misunderstanding about this tax credit is that every home buyer does not get it. This credit is only for first time home buyers. But, the good news is that the government usually defines people who haven’t owned a home in 3 years as first time buyers. So, you may not technically have to be buying your first home in order to qualify for this incentive.
Another misconception with this tax credit is that buyers think this credit is free money. Now, everyone knows there is no such thing as free money. The rule that “if it sounds too good to be true, it probably is” applies here. It’s important to note that this is actually a loan from the government to help first time buyers pay their taxes (since it’s assumed that this person will have incurred a lot of extra expenses in buying the home this past year). This tax credit is simply an incentive to help more people be able to buy these homes that are sitting on the market.
The way that it works is that this $7500 tax credit is repaid with your taxes every year at $500 a year. So, again, you will be paying this money back, but it will just be over a period of several years (similar to the loan on your home). But, unlike your home loan, this tax credit is an interest free loan. So, you’ll only be paying back that $7500.
When people realize they’re only postponing paying the inevitable tax money, they often ask if it’s really worth doing. After all, why not just pay it and get it over with? The answer depends on whether you need that money now to use for improvements to the house – such as putting carpet down, painting, or getting plumbing or electrical work done. If you’ve bought a house that is going to require some work early on, this tax credit may be worth it.
There have also been a lot of questions about the time frame the buyer purchased in order to qualify. We’ll be filing taxes in 2009 for the tax year of 2008. So, if you bought the home in 2008, you have the option to use this tax credit.
The last point I’ll mention is that this tax credit does not have anything to do with property taxes. Instead, it’s figured in with your income tax – which is confusing. For example, let’s say you file your 2008 returns and have a tax liability of $15,000 that your company withholds in wages. You would use your $7500 tax credit and pay only $7500 in your income tax. Or, if your company withheld $7500, you would use your tax credit of $7500 and would break even. In this last scenario, you would actually pay nothing this year in income taxes.
Be sure to talk to your CPA (or the person who does your tax work) about this tax credit if you think you may be eligible. Although there is a lot of information about this tax credit on the internet, it’s still important to get professional advice about taxes when filing tax returns. And, he or she should be able to answer any questions you have and give you an estimate as to how the credit will affect your income taxes this year.
Jimmy
Many buyers have been asking about the tax credit for home buyers coming up this tax year. Although this topic has gotten a lot of coverage in the news, people have gotten really confused about what it is. So, I wanted to clarify some of the misconceptions I’ve noticed when talking to home buyers.
The biggest misunderstanding about this tax credit is that every home buyer does not get it. This credit is only for first time home buyers. But, the good news is that the government usually defines people who haven’t owned a home in 3 years as first time buyers. So, you may not technically have to be buying your first home in order to qualify for this incentive.
Another misconception with this tax credit is that buyers think this credit is free money. Now, everyone knows there is no such thing as free money. The rule that “if it sounds too good to be true, it probably is” applies here. It’s important to note that this is actually a loan from the government to help first time buyers pay their taxes (since it’s assumed that this person will have incurred a lot of extra expenses in buying the home this past year). This tax credit is simply an incentive to help more people be able to buy these homes that are sitting on the market.
The way that it works is that this $7500 tax credit is repaid with your taxes every year at $500 a year. So, again, you will be paying this money back, but it will just be over a period of several years (similar to the loan on your home). But, unlike your home loan, this tax credit is an interest free loan. So, you’ll only be paying back that $7500.
When people realize they’re only postponing paying the inevitable tax money, they often ask if it’s really worth doing. After all, why not just pay it and get it over with? The answer depends on whether you need that money now to use for improvements to the house – such as putting carpet down, painting, or getting plumbing or electrical work done. If you’ve bought a house that is going to require some work early on, this tax credit may be worth it.
There have also been a lot of questions about the time frame the buyer purchased in order to qualify. We’ll be filing taxes in 2009 for the tax year of 2008. So, if you bought the home in 2008, you have the option to use this tax credit.
The last point I’ll mention is that this tax credit does not have anything to do with property taxes. Instead, it’s figured in with your income tax – which is confusing. For example, let’s say you file your 2008 returns and have a tax liability of $15,000 that your company withholds in wages. You would use your $7500 tax credit and pay only $7500 in your income tax. Or, if your company withheld $7500, you would use your tax credit of $7500 and would break even. In this last scenario, you would actually pay nothing this year in income taxes.
Be sure to talk to your CPA (or the person who does your tax work) about this tax credit if you think you may be eligible. Although there is a lot of information about this tax credit on the internet, it’s still important to get professional advice about taxes when filing tax returns. And, he or she should be able to answer any questions you have and give you an estimate as to how the credit will affect your income taxes this year.
Jimmy
can you claim first time home buyer credit if you were added to a deed?
quillera asked:
my best friend bought her home back in 2006 but this year on may of 2009 she added me to the deed since I’ve been the one living in the house since 2006 and paying for the mortgage…i already filed my 2008 return but wondering if i need to do an amendment return to apply for the first time home buyer credit with form 5405….PLEASE HELP ! thanks !
Russell
my best friend bought her home back in 2006 but this year on may of 2009 she added me to the deed since I’ve been the one living in the house since 2006 and paying for the mortgage…i already filed my 2008 return but wondering if i need to do an amendment return to apply for the first time home buyer credit with form 5405….PLEASE HELP ! thanks !
Russell
How would the first time home buyer program work if I am?
Miss L asked:
…If I am living in one state and plan on purchasing in another. (I live in Florida and I would like to purchase-soon- in North Carolina but I will not be relocating this year so Im still a Fla resident).
…If I am living in one state and plan on purchasing in another. (I live in Florida and I would like to purchase-soon- in North Carolina but I will not be relocating this year so Im still a Fla resident).
Can someone explain the specifics of the first time home buyer program as it relates to a resident in one state purchasing in another? Thanks.
It is an investment property in an area that I know has done well. It’s in a quiet area in driving distance of a business park, mall and university. I didn’t buy the first phase but I would like to buy into the second phase of brand new townhomes. I already know 3 people who built and had renters within the first 2 mos. so Im not worried about the location.
Also, I have been with my job for 2 1/2 years and I have a good financial situation. I’ve never owned a home so I was wondering would this program apply to me (given the fact that I want to buy out of state).
Mario
First Time Home Buyer Credit Application Question?
Josh C asked:
What all do I need to include on the 1040X to get my $8k credit as a first time home buyer?
What all do I need to include on the 1040X to get my $8k credit as a first time home buyer?
Is there someone I can call for help. Just want to make sure it’s filled out properly…Thanks!
Lois