First-time home buying can be a daunting task, but it doesn’t have to be. With the right knowledge, preparation, and mortgage lenders in Portland, you can navigate the process with confidence and ease. Not only do you get the satisfaction of owning your own space, but there are also numerous financial assistance options for first-time home buyers.
From tax breaks to building equity, owning a home can help you achieve your long-term financial goals. In this blog post, we’ll take a closer look at the many financial benefits of first-time home buying.
Low Down Payment
Low down payments can be a benefit to first-time home buyers because they allow them to purchase a home with less money upfront. A mortgage loan, such as those backed by the Federal Housing Administration (FHA loan), allows for down payments as low as 3.5% of the purchase price. This can make it easier for first-time home buyers to afford the upfront costs of buying a home, as they may not have as much money saved for a down payment.
With a low down payment, first-time home buyers can:
- Get into the housing market sooner rather than waiting to save up for a larger down payment.
- Keep more of their savings for other expenses, such as home repairs or furniture.
- Avoid having to pay Private Mortgage Insurance (PMI), which is typically required for down payments of less than 20%
- Have more affordable monthly mortgage payments, which can help them to better budget their finances.
Closing Cost and Down Payment Assistance Program
Down payment and closing cost assistance can help first-time home buyers with the upfront costs of buying a home. These programs can come in the form of grants, low-interest loans, or tax credits, and may be offered by federal, state, and local government agencies, as well as by non-profit organizations and private foundations.
Down payment assistance programs typically provide a lump sum of money that can be used for the down payment and closing costs. Some programs may be in the form of a loan that must be repaid, while others may be grants that do not need to be repaid. Programs that help with closing costs can help pay for things like title insurance, appraisal fees, and attorney’s fees.
Eligibility for these programs can vary, but they are usually targeted at low- to moderate-income buyers, first-time home buyers, or buyers in specific geographic areas. The income
limit, purchase price limit, and other requirements also vary by program, and location and can change based on the year.
It’s important to research the different programs that are available in your area and to speak
with a housing counselor or mortgage lenders in Portland to determine if you qualify.
The reduced PMI cost for first-time home buyers refers to a program that reduces or eliminates the need for PMI for eligible borrowers. PMI is typically required for home buyers who make a down payment of less than 20% of the home’s purchase price.
The reduced PMI cost program is designed to help first-time home buyers with limited funds for a down payment on a home. Details of the program depend on the mortgage lenders in Portland and the loan program being offered. Some common requirements for reduced PMI cost programs include a minimum credit score, income limits, and the completion of a homebuyer education course.
Home Buyer Tax Breaks
First-time home buyers may be eligible for certain tax breaks that can help offset the costs of purchasing a home. Some examples of tax breaks for first-time home buyers include:
Mortgage Interest Deduction
This allows homeowners to deduct the interest paid on their mortgage from their taxable income.
Property Tax Deduction
Homeowners may deduct the property taxes they pay on their homes from their taxable income.
Mortgage Credit Certificate (MCC)
This is a tax credit that can be claimed by first-time home buyers. The credit is based on a percentage of the mortgage interest paid during the year, up to a certain amount.
First-time Homebuyer Credit
For first-time homebuyers, it is a one-time credit of up to $8,000. It is important to note that tax laws are subject to change. So, it’s best to consult with a tax professional or the IRS forspecific information on current tax laws and your individual tax situation.
Building Home Equity
It’s among the major advantages for first-time home buyers to start building wealth. Renting a home doesn’t help a person’s finances because the rent payments don’t add to their assets. On the other hand, part of each mortgage payment goes towards paying off the principal of the loan, which increases the homeowner’s equity in the property.
Also, if the housing market gets better, the home’s value may go up, which would add to the homeowner’s equity. It’s worth noting that private mortgage insurance (PMI) is an added cost for those who put down less than 20% as a down payment.
It is typically only a temporary cost and does not affect the long-term equity-building potential of the property. For many first-time home buyers, the ability to build wealth through equity makes buying a home sooner rather than later a worthwhile investment.
Becoming a first-time home buyer is a significant step in anyone’s life. It marks the transition from renting to owning— from being a tenant to being a homeowner. The benefits of homeownership are numerous and far-reaching, both financially and emotionally.
Financially, homeowners can build equity and take advantage of tax benefits, which can help them save for the future and achieve their long-term financial goals. Emotionally, homeownership can provide a sense of stability, security, and pride. It allows individuals and families to put down roots and create a sense of belonging in their community.
PierPoint Mortgage is among the best mortgage companies in Portland. We are a team of reputable mortgage brokers in Portland helping mortgage borrowers get mortgages that fit their needs.