Financial Plusses of First-Time Homeownership

financial plusses first-time homeownership

Entering the housing market for the first time as a buyer can be a detailed and thorough process, but it can also be one with numerous personal benefits. The first of these, of course, is the ability to move you and your family into a wonderful new home and get out of the rental cycle to a place where you’re paying toward your own home investment, but there are many others also.

At Altius Mortgage and our partners at Mortgage Ogden, we have several great programs available for first-time homebuyers. We’re also happy to explain the numerous benefits of homeownership to you – did you realize that even apart from saving you money over a rental situation, being a first-time buyer has several distinct financial perks? A few of the big ones are tax-related, but there are also some others. Let’s look at both sets.

Tax Deductions

There are several different tax deductions often available to buyers:

  • Interest: This is the most common tax deduction when it comes to mortgages. Each year, your lender will send you a 1098 form that shows the amount of interest you paid to your mortgage for that year – that full amount can usually be deducted come tax time. There are some exceptions or limits here, so ask your loan officer about these.
  • Real estate taxes: You pay separate property taxes on your new home, and these taxes can be included as itemized tax deductions also.
  • Points: Some buyers pay prepaid interest in the form of points, which can be deducted also in most cases.
  • PMI: PMI stands for private mortgage insurance, which you’ll often be required to get if you don’t have 20 percent to put down on the home. Luckily, you can deduct PMI expenses, which will show up on the same 1098 form as your total yearly interest payments.

Non-Tax Financial Benefits

There are also a couple big financial areas where being a first-time homebuyer can be helpful:

  • IRA money for down payments: If you have an IRA savings account for your retirement, you are generally allowed to take up to $10,000 out of your IRA to put toward your mortgage down payment – all with no 10 percent penalty that usually comes with these kinds of early deductions. Be aware that for traditional IRAs, you’ll still pay income tax on any funds withdrawn in this manner at the time they’re withdrawn.
  • Capital gains: Just like any other investment, a home can appreciate in value over time. And if you decide to sell yours for a profit after at least two years of living in it primarily, you likely won’t have to pay capital gains taxes on up to $250,000 in profits from your sale.

For more on the financial perks that come with being a first-time buyer, or to learn about any of our mortgage loan solutions, speak to the pros at Altius Mortgage today.

Basics on Mortgage Rate Lock-In Timing

basics mortgage rate lock-in

When it comes to getting a mortgage loan, few factors are more important than your interest rate. Even a small change in your interest rate could have major implications for your total expenses across the life of a mortgage, and you have to do everything in your power to get the best rate available.

At Altius Mortgage and our partners at Mortgage Ogden, we’re here to help. We have several mortgage rate tools available, plus experienced pros who can help you with everything you need to know about your interest rate. One of the most common questions we get here: When should I lock in my interest rate? Let’s go over all the basics you need to know here.

Interests Rate Basics and Standard Timing

Interest rates on the mortgage market are constantly fluctuating based on several market factors – the economy, the stock market, the Federal Reserve, and even several areas of geo-politics. You don’t necessarily need to know every little detail of how rates rise and fall, but you do need to know this: During your loan process, market rates will almost certainly go up and down.

So when should you lock yours in, then? You’ll usually have lots of options here, but most people tend to lock their rate in a couple weeks before the loan closes – this is so you have a good idea of the rate and no unexpected issues take place. But there might be some other situations where you make a different choice, as well.

Other Rate Lock Options

There are several rate lock timeframe options out there, including options ranging from 30 days to 90 days. The longer your period, the higher rates will generally be – it naturally costs a bit more to lock in your rate for a longer period of time. No matter what, though, even if you can get a great deal, we never recommend locking in later than 15 days before final closing time. One example of when you might look for a longer lock-in period might be if your home is under construction – you might want a 90-day lock if you think rates might rise during this period.

Rate Myths

There are two big misconceptions in the mortgage rate world:

  • I can get a lower rate with the same lender after lock-in: Some borrowers assume that as long as they stick with the same lender, they can get a lower rate if market interest rates drop after lock-in. This often isn’t true, or may require a fee – you’re safe from rates rising after lock-in, but this same option isn’t always available on the flip side. Many lenders, though, do have programs that allow you to “float down” to more favorable rates.
  • I can skip rate-lock and proceed to closing directly: This is a big gamble, and one that usually doesn’t pay off. Locking in a rate in advance brings you peace of mind and prevents any risk of you suddenly dealing with far higher rates you can’t get out of.

For more on when to lock in your mortgage rate, or to learn about any of our mortgage loan services, speak to the staff at Altius Mortgage today.