Individuals in search of a home are likely to notice that certain home shoppers are referred to as first-time home buyers. There is no universal definition of a first-time home buyer, so the term is used differently in various contexts. As a result, many prospective home buyers looking at homes for sale can learn whether they qualify in some respect as a first-time home buyer.
Because of the different definitions, some first-time home buyers have actually owned homes before. The term gained popularity a decade ago as part of the name of the first-time home buyer tax credit. The tax credit has long expired, but the concept of a first-time home buyer is still used by organizations that help facilitate the home-buying process.
The federal agencies that guarantee home mortgages generally do not promote loan options specifically targeted at first-time home borrowers. However, mortgage companies emphasize the aspects of various home loans that are likely to appeal to first-time home buyers. For example, the down payment requirement on a FHA-guaranteed loan is as low as 3.5 percent.of the purchase price.
Financial incentives specifically geared toward first-time home buyers are more likely to be found at the state and local level. The definition of a first-time home buyer usually includes the requirement that you have not owned a residence for a minimum number of years. The programs vary from state to state, but they typically provide incentives such as down payment assistance or a reduction in monthly payments.
IRS tax concessions
By definition, first-time home buyers usually have no proceeds available from the sale of a previous home. However, down payment funding may be obtained through a federal tax break. Individuals who meet the IRS definition of a first-time home buyer can withdraw up to $10,000 from an IRA without penalty.
The IRS considers you to be a first-time home buyer if you have not owned a main residence during the 2-year period preceding a home purchase. If you are married and your spouse also qualifies as a first-time home buyer, each of you can withdraw up to $10,000. Because of the exception, the normal 10 percent penalty on early IRA distributions does not apply.
Once you know to what extent you qualify as a first-time home buyer, you are better prepared to apply for a mortgage or submit a purchase offer. Contact a real estate specialist to learn more about the specific incentives available in your area for first-time home buyers.Share
17 September 2017
Although I've never worked professionally in the real estate business, I sure know my way around it. How, do you ask? Well, I have simply rented a lot of different places and worked with a lot of different landlords and real estate agents. In the past 7 years I've lived in 11 different houses or apartments, none of them my own. In finding those 11, I have looked at literally hundreds of apartments. I used to hate house hunting, but now it's kind of fun. You just need to know what you want and the right questions to ask. Hopefully this blog can help you learn some of the tricks of the trade from another renter like yourself.