08/24/2020: Your First Home: What You Might Not Know About the Benefits
It may sound surprising, but despite everything that’s going on today, demand for houses remains stronger than ever. For those of you preparing to purchase your very first home, Citizens Bank can help you every step of the way.
In a recent blog, we talked about what you need to know before buying your first home. Though buying a home is a process, it’s also a huge benefit to you—for reasons that go much further than the roof over your head.
When talking about the benefits of buying a first home, most people concentrate on the fact that monthly payments are now paid into equity; that is, rather than watching your money disappear into the hands of a landlord, you’re investing in property ownership.
Today, however, we’re going to discuss a broader range of benefits that come along with buying your first home. More than an investment, you’re making a decision that will help your finances in ways you might not have even imagined.
First-time buyers often get low- or no-down-payment loans
As a leading provider of home loans to first-time buyers, Citizens Bank understands that you are making a big leap. More than anything, you’re making a commitment—to make roots in one place and make timely mortgage payments.
That commitment alone can be a big deal. Setting aside enough income to make sure you make your mortgage payments takes some budgeting. That’s why Citizens Bank offers first-time buyers low- or no-down-payment mortgages on their first homes.
As a first-time buyer, you may be eligible to put down a small fraction of the home’s total price—or nothing at all. These low- and no-down-payment home loans allow you to realize your dream of owning a home within your current budget.
Down payment assistance
Those who choose a mortgage loan with a down payment can often struggle to come up with the cash.
There are three general forms of assistance we’ll talk about today:
- Home Loan Grants
- Forgivable Loans
- Down Payment Assistance
Home loan grants
Yes, you’re reading this right: you can apply for mortgage grants to help with your down payment.
These grants come in several forms. Many are granted by down payment assistance programs (DPAs) and housing finance agencies (HFAs). These are often local agencies associated with the state, specifically the National Council of State Housing Agencies (NCSHA).
There are also mortgage credit certificate (MCC) programs that allow you to claim dollar-for-dollar tax credits on your down payment, which effectively act as a grant.
There are many ways to apply for a grant. It’s important that you explore this option when preparing your first home loan with Citizens Bank.
You can think of forgivable loans like a mortgage grant, except with some strings attached. For example, lenders may allow you to defer your mortgage payments as long as certain conditions are met.
For this reason, forgivable loans are also sometimes referred to as soft mortgages. These loans are certainly worth discussing with Citizens Bank mortgage experts when making your first home purchase.
Down payment assistance
Down payment assistance is similar to a home loan grant in that there are many avenues to acquiring such assistance. The conditions vary depending on your area, but some applicants are eligible for thousands of dollars in assistance.
As with home loan grants, these assistance measures are also conducted through state programs. With over 2,000 of these programs nationwide, be sure to check with what’s available in your state and locality.
The best benefit of all: tax credits
Ah, yes, the holy grail of owning your first home: tax credits. Just for owning a home, you’re able to deduct from your taxes the total annual interest payments made on your home.
Though the mortgage interest tax credit is the most common benefit, there are many other tax benefits worth looking into. For example, for those with low- or no-down-payment home loans, insurance premiums may be higher—and yet, you can deduct these costs from your taxable income. Owning a home even allows you to make penalty-free withdrawals from your individual retirement account (IRA).
There are seemingly infinite benefits to owning your first home, and there’s never been a better time to buy. Contact our mortgage loan experts at Citizens Bank today to get started. We’ll make sure that it’s the best decision you’ve made for you and your family.