29
Jan
By Fred Gruber
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.

28
Jan
By Fred Gruber
Home Mortgage Tips

What to Do If Interest Rates Drop After Getting a Mortgage

When securing a mortgage, buyers aim to lock in the best possible interest rate. But what if interest rates fall after you’ve closed on your loan? Are you stuck with your current rate? The good news is that you may have options, whether your loan is brand-new or you’ve been paying it off for a while. Here are three ways to take advantage of lower rates.

1. Explore a Float Down Option

Many borrowers choose fixed-rate loans for stability—they protect you from rising rates. However, if rates drop, your fixed rate stays the same.

This is where a float down option can help. Some lenders offer this as a one-time opportunity to reduce your interest rate without refinancing. While the rest of your loan terms remain the same, the lower rate could save you money over time.

Because this option can only be used once, timing is crucial. Be sure the potential savings justify the decision, and consider working with your lender to understand the terms and conditions before proceeding.

2. Refinance Your Mortgage

Refinancing is the most common way to capitalize on lower interest rates. This involves replacing your current loan with a new one at a better rate. The new loan pays off your old mortgage, and you start with fresh terms.

Refinancing offers more than just interest rate savings. You could:

  • Adjust the loan term to pay off the mortgage faster or reduce monthly payments.

  • Remove private mortgage insurance (PMI) if you’ve built sufficient equity.

  • Change borrowers on the loan if needed.

However, refinancing isn’t without costs. You’ll need to cover new closing fees, which could offset your savings if the rate drop is minor. Generally, a reduction of at least 0.5% to 1% is necessary to break even on the costs and start saving. Additionally, refinancing restarts the amortization schedule, meaning you’ll pay more interest upfront in the new loan’s early years.

3. Inquire About Loan Modifications

Loan modifications are another option to lower your interest rate. These programs are typically offered to borrowers facing financial challenges, such as a reduction in income or an inability to qualify for refinancing.

With a loan modification, the lender agrees to adjust the loan’s terms—such as lowering the interest rate or extending the repayment period—to reduce the risk of default. While these programs gained attention during past recessions, they may still be available even in stable economic conditions.

If you think a loan modification might work for you, contact your lender to discuss their specific requirements. Some programs are also supported by government initiatives to help homeowners remain in their properties.

Where to Start

If interest rates fall after you’ve secured a mortgage, you don’t have to feel stuck. Whether it’s exploring a float down option, refinancing, or pursuing a loan modification, there are ways to reduce your rate and save money.

Give us a call. We can review your current loan, discuss potential options, and guide you toward the best decision for your financial situation. With the right plan, you can make the most of favorable rate changes and keep your financial goals on track.

27
Jan
By Fred Gruber
Financial Reports

What’s Ahead For Mortgage Rates This Week – January 27th, 2025

With the holiday of the previous week in addition to an extremely light release week, only the Consumer Sentiment report is weighing in on the lending markets. With both the inflation reports showing inflation cooling off, there is still some optimism about where the Federal Reserve will take things. This optimism is only cooled by the uncertainty the new presidency will bring. Many markets have responded in kind, with lending partners showing a trend of increasing rates and other markets preparing for uncertainty. Within the next few months, we will see how the new administration intends to handle monetary policy. This will have a greater impact than the Federal Reserve on the direction things will be headed in the future. Next week will be the first FOMC Rate Decision of the year, with many being optimistic about a potential rate cut with the recent inflation data.

Consumer Sentiment (Univ. of Michigan)

Consumer sentiment fell for the first time in six months, edging down 4% from December. While assessments of personal finances inched up for the fifth consecutive month, all other index components pulled back. Indeed, sentiment declines were broad-based and seen across incomes, wealth, and age groups. Buying conditions for durables softened but remained about 30% better than six months ago amid persistent views that purchasing now would avoid future price increases. 

Despite reporting stronger incomes this month, concerns about unemployment rose; about 47% of consumers expect unemployment to rise in the year ahead, the highest since the pandemic recession. January’s data closed on Inauguration Day, and consumers of all political leanings will continue to refine their views as Trump’s policies are clarified and implemented.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw a decrease of -0.11% with the current rate at 6.16%
• 30-Yr FRM rates saw a decrease of -0.08% with the current rate at 6.96%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.07% for this week. Current rates at 6.54%
• 30-Yr VA rates saw an increase of 0.07% for this week. Current rates at 6.55%

Jobless Claims

Initial Claims were reported to be 223,000 compared to the expected claims of 221,000. The prior week landed at 217,000.

What’s Ahead

The FOMC rate decision is scheduled for next week, while the Federal Reserve’s preferred inflation measure, the PCE Index, will be released at the end of the week. Additionally, the Personal Income and Spending report, a key forward indicator of future economic trends, is also set to be released. Finally, the Chicago Manufacturing PMI data is expected to be published.