As a first-time home buyer, you probably feel a wide range of emotions. You’re excited to begin searching for Orinda real estate, but you also may feel overwhelmed when you think about all that’s required or expected of you. Thankfully, there are many benefits that first-time home buyers can utilize during their home search that make it easier to complete the transaction. Here are a few examples that you should consider utilizing if this is your first time shopping for Orinda homes.
1. Low down payment loans
A home is an expensive purchase, and for many first-time home buyers, it’s the biggest purchase they have made so far in their lives. Thankfully, there are several special loan programs available for first-time home buyers. Many new home buyers will use an FHA loan to purchase their first home. This is a mortgage administered by the Federal Housing Administration, and it allows you to purchase a home while only putting down 3.5% in the form of a down payment. Traditional loans often require as much as 20% down in order to secure a loan. An FHA loan requires the buyer to have a credit score of 580 or higher, and they require mortgage insurance to protect the lender in case of default or foreclosure. Some first-time home buyers with a higher credit score may qualify for a Conventional 97 mortgage. These loans only require 3% down, but you’ll need to have a credit score of at least 620. Like FHA loans, these loans also come with a requirement for private mortgage insurance.
If you’re hoping to purchase a home with a 0% down payment, you have a couple options. If you’re an active duty military member, or if you served in the past, you can apply for a VA loan. These loans sometimes come with lower interest rates as well, but they may require a funding fee. Depending on your circumstances, you could receive exemption from paying this loan. In addition, qualifying rural homes purchased in a USDA-approved area sometimes qualify for a USDA loan that doesn’t require any down payment. Finally, the Good Neighbor Next Door program provides discounts for some homes purchased by law enforcement officers, schoolteachers, firefighters, and first responders in certain areas of town.
2. Down payment assistance
If you’re looking for help to secure the necessary funds for your down payment, you might be interested in potential options for DPA, or down payment assistance. Some home buyers will qualify for grants to use on their down payment. These grants sometimes come with requirements like a minimum credit score or maximum home purchase price. One of the most popular down payment assistance programs is the National Homebuyers fund. Some national banks also have their own assistance programs.
3. Tax benefits
In order to ease the financial burden on new homeowners, there are several government programs in place that will allow you to save money on your taxes. You can often claim deductions on mortgage interest and property tax payments. This doesn’t mean you’ll pay less on a month-to-month basis, but it increases the likelihood that you’ll get more money back when you file your taxes each year.
Additionally, first-time home buyers may qualify for an additional tax credit. This was first instituted to respond to market challenges in 2008. While the original provision is no longer in place, a new refundable tax credit was signed into effect in 2021. This tax credit equals 10% of the price you pay to purchase your home, but it cannot exceed $15,000 (or $7,500 if you’re married and filing taxes separately).
Additionally, first-time home buyers may qualify for an additional tax credit. This was first instituted to respond to market challenges in 2008. While the original provision is no longer in place, a new refundable tax credit was signed into effect in 2021. This tax credit equals 10% of the price you pay to purchase your home, but it cannot exceed $15,000 (or $7,500 if you’re married and filing taxes separately).
4. State-specific benefits
Many states offer special packages or provisions for first-time home buyers. In the state of California, first-time buyers can take advantage of various grants and assistance programs to make it easier to purchase their first home. The state also offers discounted programs and courses to educate new buyers on what it takes to purchase a home. Finally, certain allowances and benefits may exist for buyers in specific cities. For example, if you buy a home in San Jose, you can take advantage of the Empower Homebuyers SCC program. This program may grant you access to additional funding to purchase your home, although certain requirements and obligations must be met.
5. Learn from people who have bought houses before
This may seem like an obvious tip, but if you have access to the internet, you can read thousands of first-hand accounts from people who have purchased homes before. They will tell you about things they did that were helpful and mistakes they wish they could take back. They will educate you about what the process will involve and what you need to prepare yourself for ahead of time. You can also use online mortgage calculators to get an idea of what you can afford, and you can begin looking at potential homes on online listing sites to better understand what features or amenities you want in your new home.
6. Work with a great local realtor
When you buy your first home, you may find yourself surprised by all that the process requires. It takes several months from start to finish to purchase and close on a home, and during this time, you’ll have numerous meetings to attend, phone calls to make, and papers to sign. The entire ordeal can feel overwhelming, especially if you’re moving through the process alone. Thankfully, nobody has to buy a home without help. The Kelly Crawford Team loves working with first-time home buyers. They understand that buying a home for the first time can be both exciting and challenging, and they are committed to walking with you every step of the way and answering all of your questions with respect and professionalism. Give Kelly a call when you’re ready to start seriously looking for Orinda homes.
