29
Jan
By Mike Pfefferman
Home Financing Tips

Can You Be a First-Time Homebuyer Again?

Purchasing a home is a significant milestone, and first-time homebuyer programs make the process easier for many stepping into homeownership. But what if you’ve owned a home before or are currently a homeowner? Can you qualify as a first-time homebuyer again?

Surprisingly, the answer is yes. Under certain conditions, you may be eligible for these programs more than once. Here’s a closer look at how it works, the eligibility criteria, and how to make the most of these opportunities.

Who Qualifies as a First-Time Homebuyer?

The term “first-time homebuyer” doesn’t always mean it’s your first-ever purchase. According to the U.S. Department of Housing and Urban Development (HUD), you may qualify as a first-time homebuyer if:

  • You haven’t owned a primary residence in the past three years. Even if you’ve owned a home before, taking a break from homeownership for three or more years may make you eligible.

  • You’re a single parent or displaced homemaker. If you previously owned a home with a former spouse, you might still qualify after a divorce or separation.

  • You’ve only owned non-permanent structures. Homes that didn’t meet building codes or lacked permanent foundations may not count as prior ownership.

These expanded definitions help more buyers access first-time homebuyer benefits, even if they’ve owned a home in the past.

Why Reapply for First-Time Buyer Benefits?

First-time homebuyer programs often offer significant financial advantages, such as:

  • Lower down payment requirements: Some loans require as little as 3.5%.

  • Assistance with closing costs: State and local programs may provide grants or forgivable loans.

  • Tax credits: Certain programs reduce your tax burden when purchasing a home.

  • Favorable loan terms: Access to lower interest rates and reduced private mortgage insurance (PMI).

If you qualify again, these benefits can make your next home purchase more affordable and less stressful.

Steps to Qualify Again

1. Follow the Three-Year Rule

If you haven’t owned a primary residence in the last three years, you likely qualify. Even if you’ve owned investment properties, they won’t disqualify you as long as they weren’t your primary residence.

2. Provide Documentation for Special Circumstances

If you’re divorced, separated, or a displaced homemaker, be prepared to show documentation such as legal papers or housing history to prove your eligibility.

3. Research State and Local Programs

Eligibility rules for first-time buyer benefits vary by location. Research the programs available in your area to ensure you meet the specific requirements.

Loan Options for First-Time Homebuyers

  1. FHA Loans: Popular for their low 3.5% down payment requirement and flexible credit score criteria.

  2. USDA Loans: Ideal for rural buyers, offering 0% down payment options, though income limits and location restrictions apply.

  3. VA Loans: Provide 0% down payment and no PMI for eligible veterans and active-duty service members.

  4. Special Conventional Loans: Many lenders offer conventional loans with perks like lower down payments for first-time buyers.

Tips for Repeat First-Time Buyers

  • Strengthen Your Credit Score: Even with program benefits, a better credit score can secure lower interest rates.

  • Save for Additional Costs: Beyond the down payment, set aside funds for closing costs and moving expenses.

  • Apply Early: Many programs have limited funding, so act quickly to take advantage of available resources.

  • Work with Experienced Professionals: Partner with an agent or lender knowledgeable about first-time homebuyer programs to simplify the process.

Challenges to Keep in Mind

  • Documentation: Proving eligibility, especially under unique circumstances, may require extra effort.

  • Program Restrictions: Some benefits include income caps or property eligibility rules.

  • Competition: First-time buyer programs can have limited funds, so applying early is key.

If you meet the criteria, qualifying as a first-time homebuyer again can open doors to significant financial perks, making homeownership more attainable. Whether you’re leveraging the three-year rule or special circumstances, these programs can save you money and reduce stress when purchasing your next home.

We can help guide you through the process. Homeownership may be closer than you think.

27
Dec
By Mike Pfefferman
Tax Debts

How to Buy a Home if You Owe Taxes

If you’re considering buying a home while dealing with unpaid taxes, you might be wondering how your tax debt affects your mortgage approval. The good news is, it is possible to buy a home even if you owe taxes. Here’s what you need to know about how owing taxes can impact your homebuying process.

How Owing the IRS Affects Buying a Home

You might not need to wait until your tax debt is completely paid off to apply for a mortgage. It’s important to speak with a loan officer who can guide you through your options based on your specific financial situation. If you’ve been paying off your tax debt through a payment plan, be sure to let your loan officer know and provide supporting documentation and proof of payment.

Getting a Mortgage While You Owe Taxes

While paying off your tax debt isn’t always required before getting a mortgage, there are specific qualifications for mortgages when you have unfiled taxes or a tax lien.

How to Qualify for a Mortgage with Unfiled Taxes

When applying for a mortgage, you’ll need to provide the last two years of your tax returns. If your taxes are unfiled, you’ll need to file an extension with the IRS or your state government to remain eligible.

How to Qualify for a Mortgage with a Tax Lien

A tax lien gives the government a legal claim to your property due to unpaid taxes. Federal and state liens typically need to be paid off before closing to qualify for a mortgage. The IRS releases the lien within 30 days after the tax debt is paid in full.

Exceptions to the Rule

In some cases, exceptions are made for tax liens if you have a payment plan in place. These exceptions depend on the type of loan program.

Conventional Home Loan Requirements

  • Fannie Mae (FNMA): Requires you to pay off all past-due taxes, including any tax liens, in full before closing. However, Fannie Mae allows installment plans unless there’s a Notice of Federal Tax Lien.
  • Freddie Mac (FHLMC): If you have a tax lien, Freddie Mac requires it to be paid off or be under a repayment plan for at least three months. Payment history must be documented and included in your debt-to-income ratio.

Government Home Loan Requirements

Government-backed loans (like VA, USDA, and FHA) have more flexibility but still require you to resolve your tax lien situation.

  • VA and USDA: You must pay off tax liens in full or have a repayment plan for at least three months.
  • FHA: If your tax liens are delinquent, they must be current or part of a written payment agreement that’s included in your debt-to-income ratio. You’ll need to make at least three months of timely payments.

Does Owing Taxes Affect Mortgage Approval?

Tax debt won’t automatically disqualify you from getting a mortgage, but paying off your debt will increase your chances of approval. If you can’t pay off your tax debt in full, request an installment agreement and ensure you’re making timely payments.

23
Aug
By Mike Pfefferman
Home Buyer Tips

How to Transition from Renting to Homeownership

Transitioning from renting to homeownership is an exciting and significant milestone in anyone’s life. This journey, while thrilling, can also be filled with questions and uncertainties.  I am here to guide you through this process, ensuring a smooth and successful transition working with your real estate agent. We will discuss the steps you need to take to move from being a renter to a proud homeowner.

Assess Your Financial Readiness

First and foremost, evaluate your financial situation. Owning a home involves more than just a monthly mortgage payment. You’ll need to consider property taxes, homeowners insurance, maintenance costs, and potential homeowners association (HOA) fees.

Begin by:

  • Reviewing your credit score and history.
  • Saving for a down payment.
  • Establishing a budget that includes all potential homeownership costs.

Get Pre-Approved for a Mortgage

Next, obtaining a mortgage pre-approval is crucial. This not only helps you understand how much home you can afford but also makes you a more attractive buyer to sellers.

To do this:

  • Gather your financial documents (income statements, tax returns, bank statements).
  • Shop around for mortgage lenders to find the best rates and terms.
  • Submit your application and await your pre-approval letter.

Determine Your Needs and Wants

Before you start house hunting, it’s essential to define what you need and want in a home. Consider factors such as location, size, layout, and amenities.

Think about:

  • Proximity to work, schools, and amenities.
  • The number of bedrooms and bathrooms.
  • Whether you prefer a new or older home.

Start the House Hunt

Now comes the exciting part—searching for your new home. Your real estate agent can provide you with listings that match your criteria, schedule viewings, and offer insights into the local market.

While searching:

  • Be patient and keep an open mind.
  • Attend open houses and private showings.
  • Take notes and photos to compare properties.

Make an Offer

Once you’ve found a home that fits your needs and budget, it’s time to make an offer. Your real estate agent will help you craft a competitive offer that aligns with the market conditions and your budget.

When making an offer:

  • Consider contingencies such as inspections and financing.
  • Be prepared for negotiations.
  • Stay within your budget.

Navigate the Closing Process

After your offer is accepted, you’ll enter the closing process. This involves several steps, including home inspections, appraisals, and finalizing your mortgage.

During closing:

  • Schedule and attend the home inspection.
  • Review and sign all necessary documents.
  • Complete a final walkthrough of the property.

Move In and Enjoy

Finally, once all the paperwork is signed and the keys are in your hand, it’s time to move in and enjoy your new home! This is the moment you’ve been working towards, so take the time to settle in and make the space your own.

Tips for moving in:

  • Hire professional movers or enlist the help of friends and family.
  • Unpack and organize room by room.
  • Introduce yourself to your new neighbors and community.

Transitioning from renting to homeownership is a rewarding journey that requires careful planning and guidance. By following these steps and working with a dedicated real estate agent, you can confidently make the move and start enjoying the benefits of owning your own home.