real estate

Buyers can be first-timers twice, sort of

Steve McLindenQuestionDear Real Estate Adviser,
My husband and I are prepping to buy a new home within the year. We've been married for more than 20 years, prior to which we had each bought homes under "new homebuyers" programs. Since we've now been renting for six-plus years, would we be considered new homebuyers again in today's market? Is this a one-time deal for homebuyers?
-- Janice

AnswerDear Janice,
I have some bad and good news for you.

First, the bad: The stimulus-related first-time homebuyers program, which gave home purchasers up to an $8,000 Internal Revenue Service tax credit, provided they stay in the home for at least three years, expired Sept. 30. That program has not been extended and nothing similar is planned at the federal level thus far for 2011 or 2012 due to budget constraints, despite the nation's housing woes.

Now, the good: Depending upon the city or state in which you reside, there's an assortment of down payment assistance programs available out there and they typically only ask that participants not have owned a home within the past three years. (That three-year span was the IRS cutoff as well for its now-defunct tax-credit program.) In New York City, the regional Neighborhood Housing Services' first-time homebuyer program asks on its application, "Are you a first-time buyer (you do not currently own a home and have not owned a home in the past three years)?"

Participation in previous first-timer programs usually won't disqualify you for these. Go to the Department of Housing and Urban Development's state-by-state listing of programs and other resources. Sites such as TopGovernmentGrants.com and HomebuyingInstitute.com may feature additional information and links within your state.

Unfortunately for you, big banks have scaled back their first-time buyer lending programs as well. The nation's biggest mortgage lenders do provide information and consultation for first-time homebuyers, but offer little these days in the way of those risky underwriting programs such as zero-down mortgages and first-time buyer flex-qualification options. Community banks may have a little more latitude to offer more generous first-timer deals, so check with a few of them.

The Federal Housing Administration's home loan program, while not geared only to first-time buyers, does offer them some advantages. If one or both of you have FICO credit scores exceeding 580, you might be able to qualify for a 3.5 percent down-payment program if you pass other qualifications. The are a few caveats, however. You likely would have to pay two forms of mortgage insurance on the note and an upfront insurance premium upon closing.

Good luck re-entering the homeownership market!

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