NC First-Time Homebuyer Benefits
Buying a home in North Carolina for the first time can be challenging, especially if you aren’t familiar with programs that can make it easier and more affordable. As part of deciding which home loan is right for you, consider how each possibility will help you in both the short and long term.
So, what are the benefits of being a first-time homebuyer?
1. Low or No Down Payment Loans
A low or no down payment mortgage allows first-time homebuyers to purchase a property with no money, except the standard closing costs. The Federal Housing Authority or FHA offers the most common type of low down payment mortgage, requiring as little as 3.5% down.
2. First-Time Homebuyer Grants
A first-time homebuyer grant is exactly what its name implies: money given to people who have never purchased a home before. Usually for lower income buyers, these grants are provided through government programs and foundations. A grant differs from a loan because, unlike a loan that is repaid over time with interest, a grant that’s aimed at a first-time buyer doesn’t need to be repaid.
3. Forgivable Loans
Forgivable loans, also known as soft seconds, are loans that can be partially or completely forgiven for a period of time by the lender when certain conditions are met. Essentially, these turn into grants if and when the lender decides that the conditions are met to forgive the loan. The downside, of course, is that if borrowers don’t fulfill the condition(s), they may have to repay the entire loan with interest. Forgivable loans may be particularly helpful to borrowers who struggle economically—but only if they are able to fulfill the required stipulations.
4. Federal Tax Credits
Federal tax credits were legislated by the Obama administration for first-time homebuyers in 2008 as a response to a sharp economic downturn. The Housing and Economic Recovery Act (HERA) allowed new buyers to receive a tax credit of $7,500 (later increased to $8,000). Although this tax credit was only available from 2008 to 2010, you may qualify for other credits stemming from interest paid on your mortgage.
5. Financial Freedom
This may be the ultimate benefit. When you own a home, you build equity that can lead to increased financial security. Rather than paying rent to someone else every month, that money is invested into a home that hopefully will increase in value over time. This equity can be accessed while you still own your home and/or when you sell it.
Qualifying for Grants and Down Payment Assistance
First-time homebuyer grant: Grants or forgivable loans that don’t require repayment can be approved for low- to moderate-income borrowers through first-time homebuyer programs. Approval guidelines vary by program and location, through they typically include household income and home sale price limits.
Down payment assistance: Down payment and closing cost assistance, offered by local and state housing authorities, are similar to grants. To qualify for a grant or down payment assistance, you might need to take first-time homebuyer classes. These classes are designed to help you better understand the home-buying process as a consumer.
First-Time Homebuyer in NC
Thinking about buying your first home? F&M Bank helps buyers understand their options when it comes to home loans and loan programs. Contact our mortgage department today to learn more.
*Subject to credit approval