Mortgage Updates

Who qualifies as a first time home buyer. That is a valid question. To answer it is important to know "who" is asking. The general definition is: Someone that has not owned a home in the past 3 years would be considered a 1st time home buyer. The word "home" becomes a key point. To prove lack of home ownership a buyer is required to provide copies of three years 1040 tax returns. Lenders, or agencies verify that no mortgage interest was deducted for those years.

But, what about the buyer that has owned real estate rental that was not the primary residence "home" for the last 3 or more years? Ironically, often that buyer does qualify for the down payment assistance. The items needed to prove the point:

* Copy of the rental agreement or lease for the primary residence

* Copy of the tax bill for the "other" property proving that it is "absentee owner".

If you are in this position, ask your lender to check with the DAP agency to see if you would qualify. Most lenders will automatically dismiss you.

If you are divorced and filed joint returns with your X using the interest deduction, again ask your lender to check with the agency providing the down payment assistance. If you can prove that during this time you maintained a separate residence, providing a copy of your lease or rental agreement you could be a winner.

Additionally, I have found that often previous home owners who have lost their homes through short sale or foreclosure often disqualify themselves as first time home buyers.  The key here is the timing... If the transfer OUT of your name occurred over three years ago... you may qualify.  I say may, because again it depends on the agency.  Some agencies will "pro-rate" meaning go by the date on which the transfer occurred.  Others want the whole year free from interest deductions before you will be considered a First Time Home Buyer and gain the extra benefits associated with the program. 

The benefits include down payment assistance by various degrees and the Mortgage Credit Certificate mentioned below.

As a first time home buyer you may also qualify to have Uncle Sam apply 20% of the interest paid on your loan towards your income tax liability. For information on MCC click here.

I'm always happy to answer questions... feel free to contact me.