As we begin a new school year, we want to recognize all that our educators do for our community. Teachers are the cornerstone of our communities. They shape future generations and deserve a chance to become permanent members of their communities through homeownership. Almost everyone can think of one or two teachers who have impacted their lives, no matter how old they get, so thank you!

Whether you’re a first-time homebuyer or looking for an investment property, there are loan programs and resources to help teachers and educators succeed in purchasing a home.

  • Conventional Loans: Flexible loan options with low down payments and competitive rates for teachers.
  • FHA Loans: Ideal for teachers with lower credit scores, offering low down payments and more lenient requirements.
  • NFM Flex: A special FHA loan with an added down payment assistance benefit. Great for first-time homebuyers!
  • VA Loans: No down payment or PMI required for veteran teachers, with lower interest rates and flexible use.
  • USDA Loans: Perfect for teachers in rural areas, offering no down payment and fixed interest rates.
  • Special Programs: Options like Teacher Next Door and down payment assistance make homeownership more affordable for educators.

 

Conventional Loans for Teachers

One of the most common types of mortgages available is the conventional home loan.

What Are Conventional Loans?

Conventional loans are privately backed and are not insured by the government, unlike FHA, USDA, or VA loans. They are the most common mortgage type in the U.S. and often have favorable terms for teachers, such as competitive interest rates and a low 3% down payment option.

How Do Conventional Loans Differ from Government-Backed Loans?

Conventional loans do not have the same strict criteria as government-backed loans but they generally require higher credit scores; typically 620 or above. While government-backed loans like FHA and VA often come with more limitations on the property, conventional loans offer a bit more freedom. For example, teachers can use a conventional loan to purchase a second home, rental property, or investment property.

Another key difference is that conventional loans don’t require upfront funding fees, a significant cost-saving compared to loans like FHA and VA loans. However, if you do not make a 20% down payment, you may be required to pay for Private Mortgage Insurance (PMI) until you reach 20% equity in the home.

Advantages of Conventional Loans for Teachers

  • Flexibility: Conventional loans can be used to purchase a primary residence, second home, or rental property.
  • More Options: Conventional loans are available as fixed-rate, adjustable-rate, conforming, Jumbo loans and non-qualifying mortgages.
  • Higher Loan Limits: Compared to government-backed loans, conventional loans often have higher loan limits, allowing teachers to purchase homes in more expensive areas.
  • Low Down Payment Options: Some conventional loans require as little as 3% down, making homeownership accessible to those without large savings.

Considerations of Conventional Loans

  • Higher Credit Score Requirements: Conventional loans typically require a credit score of 620 or higher, while government-backed loans often allow for lower scores.
  • PMI: Unless you make a 20% down payment, you’ll be required to pay for private mortgage insurance, adding to your monthly payments.

 

FHA Loans for Teachers

FHA loans are a great option for teachers who may not have perfect credit or a large down payment. They are designed to make homeownership more accessible to first-time homebuyers, but they are also available to anyone who meets the eligibility criteria.

What is an FHA Loan?

An FHA loan is government-backed and insured by the Federal Housing Administration (FHA). While the FHA does not lend money directly, it guarantees the loan, which encourages private lenders to offer more favorable terms to buyers. FHA loans allow for smaller down payments, sometimes as low as 3.5%, and more lenient credit requirements.

Advantages of FHA Loans for Teachers

  • Low Down Payment Option: FHA loans typically require a down payment of only 3.5%, which is low, like the other down payment options on his list.
  • Flexible Credit Requirements: FHA loans are designed for borrowers with lower credit scores, allowing teachers to qualify even if their credit score is as low as 580 (500 for special circumstances).
  • Assumable Loans: FHA loans can be transferred to a new buyer, which can be a huge advantage if interest rates have risen since the original loan was taken out. This allows you to sell your home and offer a lower interest rate to the buyer.

Considerations of FHA Loans

  • Upfront and Ongoing Mortgage Insurance: FHA loans come with an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount, and an annual mortgage insurance premium (MIP) that is paid over the life of the loan.
  • Property Restrictions: FHA loans require the home to meet certain safety and livability standards, which may limit the properties you can buy.

 

NFM Flex Loan for Teachers

Our NFM Flex loan is an FHA loan but with some of the added benefits of a down payment assistance program!

Benefits of NFM Flex for Teachers

  • Zero Down Payment: Plus, additional financing towards down payment and closing costs
  • Down Payment and Closing Cost Assistance in the form of a 2nd lien
    • 5% financing on first lien
    • 5% financing on 2nd lien covers the down payment with an extra 1.5% to go towards closing costs
  • No Income Cap: Like FHA loans, there is no maximum income limit to qualify
  • Credit Score: FHA minimum FICO score 660 required
  • Flexibility on Property Type: Can be used on single-family homes, condos, townhomes, manufactured homes & duplexes

 

VA Loans for Teachers

For teachers who have served in the military or are currently serving, the VA loan program offers one of the best mortgage options available.

What Is a VA Loan?

VA loans are government-backed by the Department of Veterans Affairs (VA) and offer significant benefits to veterans, active-duty service members, and surviving spouses. The VA guarantees a portion of the loan, allowing lenders to offer better terms with no down payment or private mortgage insurance requirements. There are a few myths surrounding VA loans, but the many advantages of this loan eclipse them all:

Benefits of VA Loans for Teachers

  • No Down Payment: VA loans do not require a down payment, which can save thousands of dollars upfront.
  • No PMI: Unlike conventional and FHA loans, VA loans do not require private mortgage insurance, reducing monthly payments.
  • Lower Interest Rates: VA loans typically offer lower interest rates than conventional loans, which can save teachers thousands of dollars over the life of the loan.
  • Lifetime Benefit: You can use your VA loan benefit multiple times throughout your life, making it a flexible and long-term advantage.

If you want to know the eligibility requirements for the VA loan guarantee, based on your service history, the agency has a very useful chart that explains it.

 

USDA Loans for Teachers

If you’re a teacher working in a rural area, a USDA loan might be a perfect fit. USDA loans are designed to help people in rural communities become homeowners and offer excellent terms for low- to moderate-income buyers.

What Is a USDA Loan?

USDA loans are government-backed by the U.S. Department of Agriculture (USDA) and are intended for people purchasing homes in rural areas. These loans offer zero down payment options, low interest rates, and long repayment terms, making them a great option for teachers living or working in rural communities.

Advantages of USDA Loans for Teachers

  • No Down Payment: USDA loans do not require a down payment, making them a great option for teachers who have not been able to save a large sum of money.
  • Fixed Interest Rates: USDA loans have fixed interest rates, so you’ll always know what your monthly payments will be.
  • Flexible Credit Requirements: There is no minimum credit score required for USDA loans, though most lenders prefer scores of 640 or higher.
  • Assumable Loans: Like FHA and VA loans, USDA loans are assumable, allowing a new buyer to take over your mortgage if interest rates rise.

Reach out to learn more about income eligibility limits for USDA properties!

 

Special Programs for Teachers

In addition to conventional, FHA, VA, and USDA loans, there are also numerous special programs designed specifically for teachers to help with down payments, closing costs, and credit challenges.

Down Payment Assistance Programs

Many local counties and states offer special down payment and closing cost assistance programs for teachers and citizens in general. These programs vary by location but often provide grants, forgivable loans, or low-interest second mortgages to help cover the down payment and closing costs.

We have several down payment assistance programs available in-house; reach out to learn more!

Teacher Next Door

The Teacher Next Door program is one of the most well-known homebuying programs for teachers. It offers grants, down payment assistance, and other benefits to make homeownership more affordable.

  • Grants: Teachers can receive up to $8,000 in homebuying grants through this program.
  • Down Payment Assistance: The program offers up to $10,000 in down payment assistance.
  • Additional Perks: Teachers also get access to preferred interest rates, appraisal credits, and more.

Teachers aren’t the only ones who benefit from this program; nurses, law enforcement officers, firefighters, EMTs, and government employees can also secure discounts, grants, and support with Teacher Next Door. 

Fresh Start Credit Repair Program

For teachers with credit challenges, the Fresh Start Credit Repair Program through Teacher Next Door provides free consultations and one-on-one assistance to improve credit scores, helping educators qualify for better mortgage terms.

Good Neighbor Next Door

HUD’s Good Neighbor Next Door program offers significant discounts on homes in designated revitalization areas. Teachers who commit to living in these areas for three years can receive a discount of up to 50% on the home’s purchase price!

Tips for Teachers Saving for a Down Payment

Even with assistance programs, saving for a down payment can be a challenge. Here are some tips to help you get started:

  1. Set a Budget: Review your monthly expenses and identify areas where you can cut back to save more for your down payment.
  2. Automate Your Savings: Set up automatic transfers to a dedicated savings account so that a portion of your income is saved without you having to think about it. High Yield Savings Accounts are great for this.
  3. Take Advantage of Side Income: Consider tutoring, teaching summer school, or other part-time opportunities during school breaks to increase your income and save for a down payment.

 

Final Thoughts

There are a variety of mortgage options and special programs available to teachers. Whether you’re a first-time homebuyer or an experienced homeowner. From conventional loans to government-backed programs like FHA, VA, and USDA, there is a loan option to fit almost every financial situation. Additionally, specialized programs like Teacher Next Door and Good Neighbor Next Door provide grants and discounts to make homeownership even more affordable for educators.

Take advantage of the resources available to you. Do your research, and don’t hesitate to reach out to a mortgage specialist who understands the needs of teachers. Homeownership is an achievable goal, and with the right loan program and guidance, you can find the perfect home to call your own.

Reach out with any questions, or to get started on your homebuying journey!

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Please consult with the Loan Originator to discuss your options and to receive specific DPA information. You will need to apply for a first mortgage loan with NFM, Inc. in conjunction with any down payment assistance program. All information contained herein is subject to change at any time. A training class might be required. All DPA programs require to apply for a 1st and 2nd mortgage. Equal Housing Lender. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs.

Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. 

Why These Agreements Matter in Today’s Real Estate World

When you’re in the market for a new home, understanding your relationship with your real estate agent is essential. One of the key elements of this relationship is the Exclusive Buyer-Broker Agreement. This legally binding contract sets the expectations for both you and your agent. As of August 17, 2024, new federal legal requirements have made these agreements mandatory for all real estate agents who use the MLS (Multiple Listing Service). So, what does this mean for you as a homebuyer?

Whether you’re buying your first home or your fifth, this agreement offers clarity, protection, and peace of mind in an otherwise complex process. Let’s break down what you need to know—so you feel confident and empowered as you step into the world of real estate.

  • Buyer-Broker Agreement: A legally binding contract that ensures your real estate agent is fully committed to representing your best interests.
  • Transparency & Protection: The agreement outlines responsibilities, clarifies expectations, compensation, and ensures your agent works in your best interest.
  • New Legal Requirements: As of August 17, 2024, signing this agreement is mandatory before viewing homes, and buyer’s agent commissions must be negotiated upfront to sign.
  • Benefits for Homebuyers: Provides clarity, access to resources, and legal protection during your homebuying journey.
  • Work with Your Lender Early: Involving your lender early helps you understand financing options, including how to cover your agent’s commission if necessary.
  • Options for Paying Agent Commissions: Explore alternatives like seller concessions, adjusting the sales price, or using cash reserves if the seller won’t cover the fees.

What is a Buyer-Broker Agreement?

Whatever you want to call it, an Exclusive Buyer-Broker Agreement, Buyer Representation Agreement, Buyer Agency Agreement, or Buyer Agent Agreement, etc., they’re all the same. At its core, a Buyer-Broker Agreement is a legally binding contract between you (the buyer) and your real estate agent. Think of it as a mutual promise—a commitment that they will represent you, free from conflicts of interest, with your best interests at heart, and in return, you agree to work exclusively with them. It’s all about clarity.

What’s Changed with the NAR Settlement?

As of August 17, 2024, due to an antitrust lawsuit, the National Association of Realtors (NAR) was a part of, federal law now mandates that an Exclusive Buyer-Broker Agreement must be signed before an agent shows any property. Previously, this wasn’t required in every state, but now it’s standard practice nationwide.

One of the significant changes is that your agent’s commission may no longer be paid by the seller’s agent. Instead, you’ll negotiate with the seller to cover your agent’s fee, which could affect your overall offer and negotiations. Additionally, listings on the Multiple Listing Service (MLS) no longer display the buyer’s agent’s compensation, so your agent will need to gather this information for you directly from the listing agent.

While this might sound like an extra layer of complexity, it’s designed to ensure transparency and fairness in the real estate process—so you always know who is working for you and how they’re being compensated.

Why Should I Sign A Buyer-Broker Agreement?

In today’s real estate landscape, transparency is crucial. With a Buyer-Broker Agreement, both you and your agent are on the same page regarding responsibilities and expectations. It can be comforting to know that your agent isn’t just opening doors—they’re actively protecting your interests, making sure you don’t overpay, miss important timelines or details, or fall into common traps during the homebuying process.

But there’s more. Many agents are self-employed and rely solely on commissions for their income. By signing this agreement, you’re ensuring that your agent is compensated for their hard work and dedication. After all, you want an agent who is as committed to helping you succeed as you are to finding the perfect home.

You might hear the terms “real estate agent” and “real estate broker” used interchangeably—but they’re not quite the same thing. Your real estate agent is the one who helps you view homes and works directly with you during the buying process. A real estate broker, on the other hand, has more advanced education and licensing. They often oversee multiple agents and manage real estate offices.

In some cases, your agent might also be a broker. If not, they work for one. Either way, rest assured that both are there to ensure your homebuying journey goes smoothly.

Why Work with a Real Estate Agent?

  • Contracts and Support: Agents assist with disclosures, contracts, and deadlines in today’s regulated environment, guiding you through every step to reduce stress and provide peace of mind.
  • Market Expertise: A real estate agent offers deep local market knowledge, helping you find the best properties and advising on fair market prices.
  • Objectivity: Agents offer an unbiased perspective, helping you meet your goals within budget and avoid emotional attachments when buying or selling.
  • Time-Saving: With MLS access and industry connections, your agent quickly identifies properties that fit your needs, saving you countless hours.
  • Negotiation Skills: Your agent negotiates to get you the best deal, whether it’s lowering the price or securing favorable contract terms.

Your agent is a key player in your real estate transaction, alongside your lender. We’re here to guide you in making one of the biggest financial decisions of your life.

Call today! We’re happy to discuss how we can support you!

Key Elements of a Buyer’s Agent Agreement

When you sign a Buyer’s Agent Agreement, it will typically include the following key components:

Term Length: The agreement will specify how long you’ll be working exclusively with your agent. It could be for one home showing, 30 days, 90 days, six months, or another timeframe that fits your needs. You can always sign another one if you’d like. This ensures that both you and your agent are fully committed for the duration of the homebuying process.

Termination Rights: No one likes the idea of “breaking up,” but if things aren’t working out, the agreement will spell out how either party can end the relationship. Make sure you understand the conditions under which the agreement can be terminated, such as notice periods or potential compensation owed to the agent.

Exclusivity: By signing this agreement, you’re agreeing to work solely with your agent or their brokerage. If that sounds daunting, don’t worry—it’s all about ensuring your agent can focus on giving you the best service possible. 

Compensation: Traditionally, the seller pays both agents’ commissions. However, that’s not guaranteed, and you may need to negotiate or contribute toward your agent’s commission if the seller doesn’t cover it. Your lender can help you understand financing options for this. More on that later.

Property Specifications: This section lays out what you’re looking for in a home—such as price range, neighborhood, and type of property. It’s a way to ensure your agent knows exactly what you need and keeps their searches within your criteria.

Agent Duties: Your agreement will outline your agent’s responsibilities—from finding and showing homes to handling offers, negotiating, and following through until closing. This is where you set the tone for communication and what you expect from each other.

Pro TIP: Let’s look into down payment assistance programs to help with your financing!
Whether you are the one needing to pay agent fees, or not, we can search for opportunities for you to save money!

Benefits of an Exclusive Buyer-Broker Agreement for Homebuyers

At first you might wonder why you should sign this agreement. Isn’t it just another formality? It’s much more than that—it’s a crucial step to ensure that you and your real estate agent are aligned. Here’s why it benefits you:

  1. Clarity and Transparency: From the beginning of your relationship, the agreement outlines what services your agent will provide, so you know exactly what to expect.
  2. Your Interests Come First: Your agent is legally bound to act in your best interests—whether that means negotiating better terms or ensuring you don’t overlook any potential issues during your homebuying process.
  3. Protection: Both you and your agent are protected under the agreement. This means that if any legal issues arise, the terms of the contract will help clarify each party’s responsibilities.

Work With Your Lender Early!

But here’s the good news: you don’t have to figure this out alone. Your lender is a key player in helping you understand all your financing options, even before you sign the Exclusive Buyer-Broker Agreement. By working with your lender early in the process, you can get a clearer picture of how your financing could work—including how your agent’s commission might be covered.

Paying Your Real Estate Agent: What Are the Options?

We know that paying your agent’s commission can feel like one more possible daunting cost in an already expensive process. When you’re juggling earnest money deposits, down payments, and closing costs, the idea of covering one more fee might add another layer of stress—especially with a challenging housing market.

For many buyers, the ideal scenario is having the seller pay your agent’s commission. This can be a major relief. Depending on the market and the specific property, seller concessions—or contributions from other interested parties like builders, agents, or lenders—could cover your agent’s fees, leaving you with fewer out-of-pocket expenses.

What Happens if the Seller Refuses to Pay Buyer’s Agent Commission?

Don’t worry, you’ve got options. If you do need to cover agent commissions, don’t panic—your lender can help you explore options for managing this expense.

Five Options to Handle Buyer’s Agent Fees:

  1. Seller Concessions: This is the ideal scenario where the seller agrees to cover your agent’s commission.
  2. Increase the Sales Price: You can raise the home’s purchase price and ask the seller to pay your agent. Your appraisal will need to support the higher price.
  3. Adjust Your Down Payment: Lower your down payment and use some of the funds to pay your agent’s commission.
  4. Use Cash Reserves: If possible, you can pay your agent directly from your savings.
  5. A Combination: Sometimes, the best option is a mix of the above—work with your lender to find a solution that works for your finances.

It’s important to have open discussions with your agent and lender to fully understand these options and decide what works best for you.

Your lender also plays a crucial role in building confidence with the seller’s agent. Throughout the homebuying process, your lender should be in close contact with the seller’s listing agent, making sure they know that you’re a serious and qualified buyer. This can go a long way in reassuring the seller that by accepting your offer, they’re choosing a buyer who’s financially stable and ready to close. When your financing is solid and your lender is advocating for you, sellers may be more inclined to assist with agent fees or other concessions to seal the deal.

Final Thoughts: The Value of a Good Homebuying Team

When it comes down to it, a great buyer’s agent does far more than open doors. They’re your advocate, your expert, and your negotiator—someone who is there to help you make one of the biggest financial decisions of your life.

By signing an Exclusive Buyer-Broker Agreement, you’re ensuring that your agent is just as invested in your success as you are. You’re establishing trust, clarifying expectations, and ensuring that your interests are represented every step of the way.

Ultimately, the goal is to work together with your agent, lender, and other key players to make sure you’re set up for success—both financially and emotionally—as you navigate the homebuying journey.

Reach out with any questions, or to get started on your homebuying journey!

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Please consult with the Loan Originator to discuss your options and to receive specific DPA information. You will need to apply for a first mortgage loan with NFM, Inc. in conjunction with any down payment assistance program. All information contained herein is subject to change at any time. A training class might be required. All DPA programs require to apply for a 1st and 2nd mortgage. Equal Housing Lender. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. 

Understanding the Influence of School Districts on Property Values and Home-Buying Decisions

When you set out to buy a home, a myriad of factors will run through your mind as you create your must-have list. Your list will probably include neighborhood, size, location, and amenities. Among these, the quality of the local school district often plays a pivotal role in determining property values. This aspect isn’t just important for families with children; it also influences home values for individuals, investors, and couples without kids. Understanding how school districts shape property values can provide you with valuable insights, helping you make more informed and strategic real estate decisions.

  • Higher Property Values: Homes in high-performing school districts often see greater appreciation and higher values.
  • Increased Demand: Strong school districts attract more buyers, leading to faster sales and higher prices.
  • Neighborhood Appeal: Good school districts enhance neighborhood stability and desirability, boosting property values.
  • Higher Property Taxes: Homes in top-performing districts usually have higher property taxes, contributing to increased school funding and property values. The inverse is also true and can perpetuate educational and financial inequality.
  • Market Resilience: Properties in top school districts are generally more stable and retain value better during economic downturns.

Start Your Search with Home Location

In real estate, the principle of “location, location, location” is frequently emphasized as the primary factor influencing property value. Within this concept, the quality of the local school district is a crucial component in determining home values. This relationship is more than academic; it has practical implications for anyone considering a home purchase.

For families with children or those planning to start a family, the quality of nearby public schools is a major priority. A well-regarded school district can provide not only educational advantages but also a strong sense of community and stability. Even for buyers without children, the attractiveness of a high-performing school district may not be immediately apparent, but these districts often lead to increased property values, enhanced neighborhood appeal, and strong resale potential.

importance of home location in relation to school district

Whether you are a young family, an empty nester, or a first-time homebuyer, understanding how school districts impact property values can aid in making strategic, informed real estate decisions. Here, we explore the key ways school districts influence home valuation.

Four Ways School Districts Impact Property Value

1. Property Value Appreciation:

The impact of school districts on property values is most evident through property appreciation. Often, there is a direct correlation between the performance of local schools and the value of nearby homes. High-quality school districts tend to be associated with increased home values due to heightened demand and perceptions of community stability and prosperity.

For instance, a study reported by The New York Times revealed that a 5% improvement in school test scores can lead to a 2.5% increase in home values. Similarly, the National Bureau of Economic Research found that every additional $1 spent on public schools results in a $20 increase in home values. This data underscores the financial benefits of investing in quality education, benefiting both schools and local homeowners.

While standardized test scores are just one aspect of a school’s performance, they provide accessible information for narrowing down your home search. Homes in reputable school districts generally experience higher demand, quicker sales, and increased prices.

2. Increased Housing Demand:

High-performing school districts generate significant demand for homes. Research from the National Association of REALTORS® (NAR) indicates that 30% of buyers aged 33-42—likely to have young children—consider “quality of the school district” as a top factor when selecting a neighborhood.

Homes in desirable school districts often receive more online views and sell faster compared to properties in less favored areas. Realtor.com reports that homes in high-performing school districts sell eight days faster than those in other regions. This heightened demand can drive up property values, as buyers are eager to make competitive offers on homes in these sought-after districts.

Even buyers without children may find homes in strong school districts attractive due to the associated stability and potential for long-term value appreciation, further boosting property values.

3. Neighborhood Stability

The reputation of a school district can significantly influence the perceived stability and appeal of a neighborhood. Schools with strong academic performance and positive community engagement often create a “halo effect” that extends to the surrounding area.

This perception of stability and prosperity can enhance property values. Homes in neighborhoods with highly regarded schools are often viewed as more desirable due to the associated benefits, such as higher incomes, better resources, and lower crime rates. Although this is more of a perceived effect than a direct cause-and-effect relationship, it can still powerfully impact property values.

Appraisers consider both objective and subjective factors when determining a home’s value. As properties in desirable school districts generally achieve higher sales prices, this can influence appraisals and future property values in the area.

4. Impact of Property Taxes

While public schools may seem “free” to attend due to the absence of upfront costs or monthly fees, they are funded through local, state, and federal taxes, with local property taxes playing a substantial role. Homes in high-performing school districts often have higher property taxes, which are used to support and enhance the schools, creating a cycle of increased performance and higher property values.

In contrast, the funding disparities between affluent and less wealthy school districts can perpetuate educational inequality, affecting low-income students and contributing to a cycle of poverty. Additionally, the NAR found that home prices in high-performing suburban school districts were 49% higher than the national median and 77% more expensive than those in lower-ranked districts.

Many states have stepped in to help compensate for this imbalance locally, but it’s still important to understand how local property taxes fund public schools and the broader socioeconomic impacts concerning your own home research.

School Districts Matter, whether you have children or not

What Else Matters?

  • Resilience During Market Volatility:

    Homes in high-performing school districts tend to exhibit greater resilience during market downturns. An experiment by BiggerPockets, a real estate investor, found that properties in districts with high school ratings (4-5 stars) experienced less severe value declines during recessions compared to homes in less desirable districts (1-3 stars). This resilience is attributed to the sustained demand for homes in strong school districts, which can help maintain or even increase property values during economic uncertainties.

    For sellers, this means that homes in reputable school districts can be a safer investment during volatile market conditions, potentially achieving higher prices and quicker sales.

  • Proximity to Private Schools:

    The presence of private schools can also influence property values. While private schools are not funded through public taxes, their proximity can enhance the appeal of a neighborhood. Homes near prestigious private schools often command higher prices, as buyers are willing to pay a premium for the convenience and prestige associated with these institutions.

    The presence of both public and private educational institutions can make an area more attractive to potential buyers, driving up property values.

  • Finding the Right Fit:

    Ask ten different families and you’ll get ten different answers on what makes a school “good”. For some, traditional metrics such as test scores and graduation rates are sufficient, while others may seek a school that offers a specific cultural or emotional fit for their children.

    If you’re looking for a school district that aligns with your family’s specific needs rather than just a highly ranked school, consider exploring resources like Niche.com’s blog post “Beyond Test Scores, What Really Makes a “Good” School?” for additional questions to help you find the right school.

School Districts Matter, Whether You Have Kids or Not!

The impact of school districts on property values is substantial and multifaceted. Regardless of whether you have children, evaluating the quality of local schools can be a strategic component of your home-buying or real-estate-investing process. The benefits of purchasing in a high-performing school district extend beyond educational outcomes, affecting property values, demand, neighborhood stability, and property taxes.

Homes in strong school districts generally appreciate faster, attract higher demand, and offer greater long-term value. Understanding these dynamics can aid in making a well-informed real estate decision. Collaborating with a local real estate agent can provide further insights and help evaluate the best options based on your unique needs and goals. By factoring in the quality of local schools, you can make a more comprehensive decision that benefits you now and in the future.

Let’s get you pre-approved in your favorite school district, today!

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Have you ever dreamed of owning a home but felt discouraged by the thought of a hefty down payment? You’re not alone. For many Americans, saving for a down payment can be a significant hurdle. Fortunately, there’s good news! Down payment assistance programs (DPA programs) can help bridge the gap and make homeownership a reality.

We aim to bring more attention to DPA programs and the positive effect they have on home affordability, especially for first-generation and first-time homebuyers. Down Payment Assistance programs have never been more crucial. By increasing awareness among both buyers and real estate professionals, we can empower more people to achieve the dream of homeownership.

  • Down payment assistance programs (DPAs) exist to help you buy a home. These programs can provide financial support for your down payment and closing costs.

  • You don’t need a large down payment to buy a home. There are loan options with low or even no down payment requirements, and DPAs can further assist with this.
  • Closing costs can be significant. Understanding these costs is crucial when budgeting for your home purchase.
  • There are different types of DPAs. Grants, forgivable loans, low-interest loans, and deferred-payment loans are available options.
  • Eligibility for DPAs is broader than you might think. Many programs are open to a variety of individuals, not just first-time homebuyers.
  • Taking action is key. Research available DPA programs, get pre-approved for a mortgage, and work with a knowledgeable lender to guide you through the process.

What Are Down Payment Assistance Programs?

DPA programs are financial tools designed to ease the burden of down payments and closing costs for qualified homebuyers. These programs come in various forms, including grants, forgivable loans, and low-interest loans. They can significantly reduce the upfront costs associated with buying a home, making homeownership more accessible and affordable.

What Do Down Payment Assistance Programs Pay For?

Despite the general name of “down payment” assistance programs, many assistance programs allow funds to be used toward a down payment or closing costs, or both!

Down Payment:

Though there are several common loan programs with 0% down payment required for eligible buyers, generally the lowest down payment options you will find require 3-5% of the home purchase price to pay upfront on your loan.

Closing Costs:

Not as widely discussed as down payment, but equally as important is closing costs. This group of fees and expenses can potentially end up higher than your down payment amount (especially if using a low or no down payment option). Closing costs are fees and expenses, ranging from 2-6% of the loan amount that are also due at closing with the down payment.

They will cover services and taxes such as appraisals, title insurance, taxes, origination fees, etc. For example, if your home loan is $250,000, you might pay between $6,000 (2%) to $18,000 (6%) in closing fees especially if you live in an area with higher local taxes.

Pro TIP: Closing costs can also be a negotiation factor with the home seller/builder, real estate agents or your lender. You may not need a DPA program to help with these – let’s chat about this if you have more questions on closing costs.

Graphic explaining the difference between down payment and closing costs

Benefits of Down Payment Assistance:

  • Reduced Upfront Costs:

    DPA programs can free up your savings, allowing you to focus on other moving expenses or future home improvements.

  • Increased Buying Power:

    With DPA assistance, you could qualify for a higher loan amount, opening up more home-buying options.

  • Greater Affordability:

    DPA programs can make monthly mortgage payments more manageable.

  • Accessible for Various Buyers:

    DPA programs cater to a variety of individuals, including first-time homebuyers, people with disabilities, veterans, and low-to-moderate-income families.

  • Promotes Stable Communities:

    By helping more people achieve homeownership, DPA programs contribute to building stronger communities.

Types of Down Payment Assistance Programs:

There are numerous DPA programs available to fit different buyers’ needs. Here are a few common types:

  1. Grants:

    A homebuyer grant is a type of DPA program that provides a one-time cash sum applied directly to reduce the amount needed for down payment on the loan. The best part is – they don’t have to be repaid.

  2. Forgivable Loans:

    These function like second mortgages but are forgiven if you meet specific requirements like paying your mortgage on time every month and staying in the home for a specific period (typically from 3-10 years). The loan is forgiven in increments until it’s completely forgiven at the end of the period. If you decide to move before then, you’ll need to pay back the funds that have yet to be forgiven. If you adhere to the requirements, you won’t have to pay the loan back at all!

  3. Low-Interest Loans:

    These loans are similar to second mortgages but with a lower interest rate than your primary mortgage. You’ll repay the low-interest loan along with paying monthly payments for the first mortgage, typically over a few years.

  4. Deferred-Payment Loans:

    You don’t typically pay interest on these loans, but you’ll eventually need to repay them when you sell the house or refinance the mortgage.

  5. Individual Development Accounts (IDAs):

    These matched savings accounts require participants to save money and receive matching funds from a government agency or community organization.

Down Payment Assistance Savings Growth

Who Offers Down Payment Assistance Programs?

There are thousands of down payment assistance programs nationwide. Programs may be offered by your state, county, and city government agencies, non-profit organizations, or even individual mortgage lenders. They can take the form of grants, loans, or a combination of both. The terms and conditions of these programs are all very different, but the ultimate goal is to make home-buying more accessible for more people by removing barriers or adding incentives.

The Department of Housing and Urban Development (HUD) has a list of local home buying programs by state. Check with your city and county to see if they offer any grants or loan programs. Your loan officer can also help you to find the right DPA program for you!

What Are the Eligibility Requirements?

Qualifying for a DPA program might be easier than you think – don’t rule yourself out! Eligibility requirements vary by program, but here are some common factors:

  • Property Location:

Some programs prioritize buyers in specific areas, like rural communities or Metropolitan Statistical Areas (MSAs).

  • Cash Reserves:

Programs might require a minimum or maximum amount of savings.

  • Homebuyer Education:

Many programs require completion of a homebuyer education course. These courses can be done in person or virtually and provide valuable information about the home buying process, financial management, and homeownership responsibilities.

  • Occupancy Requirements:

These programs are typically for primary residences, not investment properties or second homes.

  • Income:

Programs often help those with incomes below or within certain area median income levels.

  • First-Time Homebuyer Status:

Often the term “first-time homebuyer” will refer to someone who has not owned a home within the last 3 years. Check with each DPA program to understand their requirements.

  • First-Generation Homebuyers: 

Some programs target first-generation homebuyers, who are less likely to be able to rely on assistance from family. 

  • Individuals with Disabilities: 

There are a variety of down payment assistance options available to borrowers who have a disability or a family member living with them that has a disability.

  • Service Professions:

Veterans, teachers, firefighters, and other community heroes may have access to specific programs.

  • Credit Score:

While some programs allow for lower credit scores, many still require a minimum credit score.

Misconceptions About Down Payment Assistance:

One of the biggest misconceptions about DPAs is that they’re only for first-time homebuyers. Not true!  Did you know that you can qualify as a “first-time” home buyer even if you’ve owned a house before? You are considered eligible to apply for first-time home buyer loans and benefits if you haven’t owned your principal residence in the last three to five years. So, if you owned a home in the past but are renting now, don’t just count yourself out, just make sure to check how your target program defines the term.

Nearly 40% of all programs are open to repeat buyers who have owned a home within the past three years or longer.

The Steps to Getting Down Payment Assistance:

The steps to access a DPA program typically involve:

  1. Pre-approval: Connect with a mortgage lender to help you understand how much loan you qualify for and how much assistance you may need.
  2. Research and Apply for Assistance: Your loan officer will help discuss your eligibility factors and find DPA programs that you could qualify for.
  3. Homebuyer Education: Most programs require completion of a short online or in-person homebuyer education course.
  4. Approval and Assistance: If approved, you’ll receive details about the program and the assistance you qualify for.
  5. Purchase Your Home: Work closely with your lender and realtor to ensure a smooth transaction.
  6. Comply with Program Requirements: Maintain eligibility by meeting program requirements, such as occupying the home as your primary residence for a set period.

Still Unsure?

Even if you’re unsure if you would qualify for a DPA program, don’t hesitate to reach out to your loan officer. This will give you a clearer picture of your affordability and potential loan amount. Your loan officer can assess your situation and explore all your options, including DPA programs, gift funds, and other strategies to tackle down payment or closing cost challenges.

Your loan officer will be happy to help you narrow down the programs you may be eligible for and help you navigate the process.

Remember, homeownership is a dream within reach for many!

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Please consult with the Loan Originator to discuss your options and to receive specific DPA information. You will need to apply for a first mortgage loan with NFM, Inc. in conjunction with any down payment assistance program. All information contained herein is subject to change at any time. A training class might be required. All DPA programs require to apply for a 1st and 2nd mortgage. Equal Housing Lender. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. 

Dreaming of shedding years off your mortgage and saving a ton on interest? You’re not alone. From millennials and Gen Z to those who are preparing to retire, many homeowners are prioritizing early mortgage payoff. Here we’ll explore powerful techniques to pay off a mortgage early like biweekly payments, lump sum payments, and even the potential of mortgage refinance. We’ll answer all your burning questions, like “Is it really better to pay off my mortgage early or invest?” Let’s unveil the best ways to pay off your mortgage early and help you craft a personalized plan for financial freedom.

Why Pay Down your Mortgage Faster?

Now that you’re a homeowner, you aren’t paying your landlord’s mortgage and instead you’re building equity in your own place. Now picture yourself with that same home and free from a monthly mortgage payment, with the financial freedom to invest, travel, retire, or just breathe a little easier. That’s the magic of early payoff.

What are some advantages to paying off your mortgage early?

  • Save Money on Interest: The longer it takes to pay off a loan, the more interest is paid over that time. Early payoff can mean tens or even hundreds of thousands saved in the long run (depending on loan size).
  • Fast-Track to Financial Freedom: Being mortgage-free means a significant chunk of your income is freed up. Depending on your investment strategy, this could allow you to invest more aggressively, save additional money for retirement sooner, or simply enjoy a more comfortable lifestyle.
  • Tap Into your Home Equity: A larger dent in your mortgage balance increases your equity. Your home’s equity can be a valuable resource for unexpected expenses or home improvements.
  • Peace of Mind, Priceless: There’s a priceless serenity that comes with knowing your home is truly yours, with no monthly payment hanging over your head.

What is the Best Way to Pay Off Your Mortgage Early?

There’s no one-size-fits-all approach to early mortgage payoff. The ideal strategy depends on your financial situation, risk tolerance, and long-term goals. Consider these factors when creating your plan:

  • Current Financial Situation: Analyze your income, expenses, and existing debt to determine how much extra you can comfortably allocate towards your mortgage.
  • Risk Tolerance: Are you comfortable with a potentially tighter budget in exchange for faster payoff?
  • Long-Term Goals: Do you prioritize early financial freedom or are there other financial goals you want to focus on?

Once you’ve considered these factors, you can choose the strategies that best suit you.

Understanding Principal Vs. Interest

Before we delve into specific strategies, let’s solidify the role of interest vs principal in your mortgage payment. This is key to maximizing your payoff efforts.

  • Interest: The fee you pay for borrowing money (expressed as APR).
  • Principal: This is the actual amount of money you borrowed for your mortgage to purchase the home.
  • Amortization: The calculation of how your loan is paid down over a specific amount of time when regular payments are made.

Note: There are other costs added to your total monthly mortgage payment (local property taxes, homeowners insurance, HOA fees, etc.), but we’re only discussing principal and interest right now.

Every monthly payment is divided between interest and principal. In the early years of your loan, a larger chunk goes towards interest, with a smaller amount chipping away at your principal balance.

Interest vs payment sample graph. This shows the correlation between interest and principal to make up a total, fixed-rate monthly payment over the amortization period. Early mortgage payoff means more interest saved over the life of the mortgage.

Example: For simplicity, let’s imagine your monthly Principal and Interest (P&I) payment is $1,000. Every loan is amortized over time, meaning monthly payments are split between principal and interest, reducing the loan balance over the span of your loan term. In the beginning, maybe $700 goes to interest and only $300 reduces your loan amount. The next month, your overall principal is reduced by $300 and the interest is now calculated upon your new, lower balance. That’s why early payoff is so powerful – it allows you to pay down the principal faster, reducing the overall interest you pay over time.

Related: Take a look at our amortization calculator.

Strategies for Early Mortgage Payoff

Pro Tip: Before changing your payment strategy, confirm if your mortgage servicer allows extra principal payments without penalties. 

Alright, now that you’re armed with that knowledge, let’s explore some strategies to conquer your early mortgage pay-off strategy. Get ready, these may surprise you!

The Biweekly Mortgage Payment: 

One popular way that some homeowners pay down their principal more quickly is to make biweekly payments. Instead of paying one monthly payment, you pay half the payment every 2 weeks.

Here’s a simple example to show the power of a biweekly payment. Let’s say you have a home loan for $400,000 with a 7% interest rate on a 30-year mortgage. In the example below you would pay $139,850.33 less in interest over the life of the loan with biweekly mortgage payments than if you made standard monthly payments!

There are online calculators available to determine these payments, or we can talk and run the numbers for you!

How Does a Biweekly Mortgage Payment Work?

Because a year has 52 weeks, this works out to 26 biweekly payments. This essentially allows you to make 13 full payments a year instead of 12. That one extra payment really compounds over time! When you pay your principal balance down faster, there’s less money to charge interest on, which lowers the amount of overall interest paid.

Make an Additional Principal Payment

Similar to biweekly payments, you can make an extra payment towards the principal each month. Even a small amount can make a big difference over time. Let’s revisit our example: $400,000 loan at 7% interest with a 30-year loan term. If you consistently put an extra $500 towards the principal each month, you could save a significant amount of money on interest payments in the long run.

Additional Principal Payment

There are online calculators available to determine these payments, or we can chat and run the numbers for you!

Important! Be sure to clearly communicate to your lender that any extra payments should be applied to the principal, not interest. 

Rounding Up: Small Change, Big Impact

Don’t underestimate the power of small changes. Consider rounding up your monthly payment to the nearest hundred and applying the difference towards the principal. This might seem insignificant, but over the years, it can make a dent in your loan amount.

For example, rounding up a $1,950 payment to $2,000 translates to an extra $50 towards the principal each month. Over a 30-year loan term, that’s a total of an extra $18,000 you’ve put towards your loan principal and $18,000 less that interest has had to compound on!

Windfall Warrior: 

Tax refunds, bonuses, or unexpected financial windfalls can be powerful tools for early mortgage payoff. Instead of spending them all, consider putting all or part of that money towards a lump sum payment on your mortgage principal.

Let’s say you receive a hefty $5,000 tax refund. Putting that entire amount towards your principal can significantly decrease your loan balance, reducing your future interest payments.

More Early Payoff Strategies for the Ambitious Homeowner

Should I Refinance My Mortgage to Pay it Off Faster?

Refinancing your mortgage can be a strategic move for early payoff. It involves replacing your existing loan with a new one, typically with a shorter term (like a 15-year loan) and ideally a lower interest rate. For example, if you were to refinance and get a 2% lower interest rate, you could save thousands of dollars on interest over the life of the loan.

Another benefit of a shorter loan term: With a 15-year loan, you’ll be putting more money towards your principal balance each month. This allows you to pay off your house much faster and save on overall interest costs. While your monthly payment will increase because the loan term is shorter, it won’t double (which is a common misconception with shorter term mortgages).

Important to consider: There are closing costs associated with refinancing a mortgage. These upfront fees can be significant. Let’s discuss this to make sure the long-term savings from a lower interest rate outweigh the upfront costs of refinancing.

Purchasing with a 15-Year Fixed-Rate Mortgage Option:

If it fits well into your budget, a 15-year fixed-rate mortgage might be an option when purchasing a new home. While the monthly payments will be higher than a 30-year loan, you’ll build equity much faster and save a ton on interest in the long run. Let’s discuss your options and we can give you advice on what would be best for you with your personal budget and finances.

Related: Check out our calculator to compare 2 mortgage options!

 

Should I pay off my mortgage early or Invest?

It might not all be about “can I pay down my mortgage early?”, a better question might be “should I?”

  • Cash Flow Flexibility: Putting extra money towards your mortgage might mean tightening your belt in other areas. Make sure you have a solid budget and an emergency fund saved up before diving in. Financial experts recommend 3-6 months’ worth of your expenses set aside for an emergency.
  • Investment Opportunities: The money you put towards early payoff could potentially generate a higher return if invested elsewhere. However, the stock market has inherent risks, while paying off your mortgage guarantees a return in the form of saved interest. Let’s discuss this and talk with your financial advisor to discuss where your bucks will make the most bang!

Ultimately, the decision depends on your financial goals and risk tolerance, but it is important to know all of your options!

Own Your Future, One Payment at a Time

Remember, paying off your mortgage early is a marathon, not a sprint. Be patient, stay disciplined, and celebrate your milestones along the way.

Let’s talk! We can run all kinds of scenarios for you on your current and potential mortgage options. We’ll see how funds can be allocated and the long-term impact of those choices. We’d love to help you calculate your individual situation!



NFM Lending is not a Financial Advisor, Tax Advisor or Credit Repair Company. You should consult with a Financial Advisor, Tax Advisor or Credit Repair Company to learn more. Refinancing an existing loan may result in the total finance charges being higher over the life of the loan.

Tax Day has come and gone, but while tax season isn’t on most people’s list of “favorite day of the year”, there’s a light at the end of the tunnel: your tax refund! The average refund in 2023 was $2,753, and with that kind of windfall, a tropical getaway might seem tempting. But before you jump on a plane, let’s explore how you can leverage your tax refund. A down payment for a first-time homebuyer, or long-term goals like financial freedom and building generational wealth!

Can I Use my Tax Refund for a Down Payment?

Are you dreaming of homeownership? Using your tax refund for a home purchase could lead to several advantages when owning your first home! Here are some benefits to a larger down payment on your loan:

  • Lower Interest Rate: A larger down payment can qualify a first-time homebuyer for a more favorable interest rate on your mortgage.
  • Smoother Pre-Approval Process: A bigger down payment strengthens your financial standing. With less “risk” for a lender to consider, this can make the pre-approval process smoother.
  • Avoiding PMI: With a down payment of at least 20% of the home’s value, you will avoid private mortgage insurance (PMI), which adds to your monthly mortgage payment.
  • Lower monthly payment: This one might be a no-brainer, but a larger down payment means a smaller loan amount. Smaller loan amount equals smaller monthly payment!

Related: Down-payment assistance programs can help first-time homebuyers get started and increase your down payment!

How Much do I Need for a Down Payment on my First Home?

Down payment requirements vary by the type of loan you want to have. Lower down payment doesn’t always mean a better loan program; there are multiple different factors to decide which loan program is right for you. The best mortgage for a first-time homebuyer is the loan that you’re most qualified for. That will depend on several factors, including your debt-to-income ratio, credit score, and yes…down payment.

We take all of these factors into consideration and help you strategize between your options and choose the right one to fit your current and future goals.

Mortgage Types and Minimum Down Payments

 

Common Mortgage Types and Minimum Down Payment

 

Related: Check out our mortgage calculators to do the down payment math yourself!

It’s easy to see how a first-time homebuyer can use a tax refund for a down payment and boost their homebuying strategy, but what about people that already own a home? Other than using the funds for home renovations, how can you use your refund to set yourself up for a better future?

Can I Pay Down Principal or Refi with a Tax refund?

We understand the allure of a vacation, but here’s the thing: by putting your tax refund towards your mortgage, you’re essentially doing two things at once: saving money on interest payments in the long run and building equity in your home faster.

Your tax refund may also be able to help you pay fees associated with refinancing to save you money by:

  • Lowering your interest rate
  • Shortening your loan term (from 30yr to 15yr) 
  • Removing private mortgage insurance (PMI) that may have been required if your down payment wasn’t 20% or more of the cost of your home.

If you’ve decided to use your tax refund on your existing mortgage, there are a few ways to go about it:

1. Applying Tax Refund to Principal

A lump-sum payment directly to your principal balance shortens your loan term, builds equity, and ultimately saves you on interest. The more you pay down the principal, the more interest you save.

Keep in mind:

  • Ensure the payment goes towards your principal, not just a regular payment (principal + interest). 
  • Check for prepayment penalties – some mortgages have them for early large payments. Review your loan terms and talk to your lender if needed.
  • Some lenders might offer “loan recasting,” which recalculates your remaining loan term with the lower principal balance, potentially reducing your monthly payments.

If you’re looking for options to lower your monthly payments specifically, refinancing might be a good fit if rates have lowered since you first bought your home.

2. Using a Tax Refund for Refinancing Fees

Refinancing your mortgage means replacing your existing loan with a new one, potentially with a lower interest rate, better terms, or you could take cash out for projects or major life changes. Here’s where your tax refund can come in handy – it can help cover the refinancing fees, including closing costs and appraisals.

Is refinancing a good option for me?

  • Lower Interest Rates: Perhaps interest rates have dropped since you first took out your mortgage, offering an opportunity to save.
  • Improved Credit Score: If your credit score has improved significantly since the last time you bought a home, you might qualify for a lower interest rate.
  • Debt Reduction: Have you paid off other debts since buying your home? A lower debt-to-income ratio can improve your eligibility for a better interest rate.

Related: How Important is Credit Score When Buying a Home?

How much does a refinance cost?

While refinancing can save you money in the long run, there are upfront costs involved that you should consider. The Mortgage Reports estimates closing costs to range between 2-6% of your loan amount.

Here are some situations where refinancing might not be the best move for you:

  • Recently Closed Loan: Many lenders and loan programs have restrictions on how soon you can refinance after taking out a new mortgage. For almost everyone, you’ll want to wait 180 days before refinancing after your most recent loan began.
  • Minimal Interest Rate Drop: Aim for a rate reduction of at least 1.5-2% to make the refinancing process worthwhile compared to the cost.
  • Short-Term Ownership: If you plan to sell your home soon, refinancing might not make financial sense.
  • Longer Loan Term: Since a refinance is a new loan on the same property, you’ll be starting your loan term over again. A longer loan term might seem appealing for lower monthly payments, but it ultimately means paying more interest overall.

Not sure if refinancing is right for you? That’s why we’re here! Our team can do a complete cost analysis for you before you start the process, making sure you’re confident in your decision before taking the first step.

Boost Next Year’s Tax Refund

Let’s say your tax refund this year wasn’t quite enough to make a huge dent on your homeownership goals today. Don’t worry, there are still ways to optimize your tax situation for next year’s return, potentially putting more money back in your pocket to fuel your homeownership dreams.

Here are some key strategies to consider:

Tax Credits for Homeowners

  • Mortgage Credit Certificates (MCCs): These state-issued tax credits can be a game-changer, allowing you to claim a portion of your annual mortgage interest as a federal tax credit, effectively lowering your monthly payments.

Reach out to us to learn more about MCCs and eligibility requirements in your area!

Homeownership Tax Deductions

  • Mortgage Interest: You can typically deduct your mortgage interest payments up to a certain limit depending on your loan amount and filing status.
  • Mortgage Points: If you paid upfront points to lower your interest rate, you might be able to deduct them as well, subject to specific IRS qualifications.
  • Property Taxes: The property taxes you pay on your home are generally deductible. If you dedicate a specific space in your home exclusively for work purposes, you might be eligible to deduct a portion of your related expenses like utilities and internet. 
  • Home Office Expenses: If you dedicate a specific space in your home exclusively for work purposes, you might be eligible to deduct a portion of your related expenses like utilities and internet.
  • Find out more here: The IRS published a great resource for homeowners in 2023 regarding what you can and cannot deduct, MCC credit and other information.  

Keeping good records of your mortgage-related expenses is crucial. This includes your loan documents, receipts for points paid, and documentation of any home improvements you make.

It’s important to note that tax laws can be complex, and eligibility for deductions and credits can vary depending on your specific circumstances. Consulting with a tax professional is always recommended to ensure you’re taking advantage of all the benefits available to you and remaining compliant with federal tax law. We can help you explore these options, or get you in contact with a great Tax Advisor.

In Conclusion

By implementing these strategies and working with a trusted loan officer, you can turn your tax refund into a springboard for achieving your homeownership dreams. We’re here to guide you through every step of the journey, from maximizing your tax refund to navigating the mortgage process.

Get a no-cost pre-approval and explore down payment options for first-time homebuyers – click the Apply Now button above!

 

 

* NFM Lending is not a Financial Advisor, Tax Advisor or Credit Repair Company. You should consult with a Financial Advisor, Tax Advisor or Credit Repair Company to learn more. The pre-approval may be issued before or after a home is found. A pre-approval is an initial verification that the buyer has the income and assets to afford a home up to a certain amount. This means we have pulled credit, collected documents, verified assets, submitted the file to processing and underwriting, ordered verification of rent and employment, completed an analysis of credit, debt ratio and assets, and issued the pre-approval. The pre-approval is contingent upon no changes to financials and property approval/appraisal.

Getting ready to purchase a home is a huge financial undertaking. While you are probably aware of having to save up for a down payment, you might not know about closing cost fees. Don’t be taken by surprise at the closing table; here’s what you need to know about closing costs.

What are closing costs?

Closing costs are the fees charged for services performed during the home purchasing process that you will pay at closing. Closing is the final step of the loan process and is a meeting between you (the buyer), the seller, and closing officer (a lawyer or title/escrow company representative, depending on the state). You will review the legal documents provided in your loan package and execute all required documents. This step is extremely important, as it is the final confirmation of the loan terms as discussed with your lender.

What fees are included in closing costs?

The closing costs you might have to pay will vary based on the property, where you live, and the loan you choose. The following are a few of the most common fees you may see.

Again, closing costs will not be the same for everyone as they vary by region. On average, most homebuyers typically pay about 2 to 5 percent of the home loan amount. For example, if you are getting a loan for $250,000, you might pay between $5,000 and $12,500 in closing fees.

Can I avoid closing costs?

It is likely you might be able to avoid some closing cost, but not all. Here a few ways to save on closing costs.

Your lender will provide you with an estimate of what closing costs will be at the beginning of your application process, which will allow you the chance to shop around to find the best lender and deal for you. After finding a lender and going through the loan process, you will receive a closing disclosure, or the final closing cost total, at least 3 business days prior to closing. This is your time to make sure everything looks right and if you have questions or find a mistake, you have time to contact your lender. If you’re worried about how much you’ll pay in closing costs, there’s plenty of options for you! NFM participates in most state bond programs that provide closing cost assistance.

To learn more about closing costs or bond programs, contact one of our licensed Mortgage Loan Originators. If you are ready to begin the home buying process, click here to get started!

Are you ready to purchase your first home? The homebuying process can get overwhelming, especially when considering all your financing options. While there are several mortgage options available, these are the top loan products for first-time homebuyers.

Conventional

A conventional, or conforming, loan is not insured or guaranteed by the federal government. This loan option adheres to guidelines set by Fannie Mae and Freddie Mac. With this loan, you can choose between a 15 or 30-year term, with a fixed or adjustable interest rate. Conventional loans are typically used by borrowers with good/great credit and typically require a higher income.

FHA

An FHA (Federal Housing Administration) is a government-insured loan. This loan is popular among first-time homebuyers because of their low minimum down payment. This loan requires only a 3.5% minimum, which is much lower than other loan options. You might also pay fewer closing costs.

VA

VA loans are guaranteed by the United States Department of Veterans Affairs for eligible American Veterans and active duty service members. These loans were designed to guarantee service members a federally funded home with their no down payment requirement and up to 100% financing. Information on eligibility for VA loans can be found on the VA website.

Purchasing your first home is a huge milestone. Having a qualified mortgage professional by your side to help you choose the right loan option will ensure a smooth homebuying experience. Let them help you start the homebuying process by getting pre-approved today!

If you have any questions about these loan products, contact one of our licensed Mortgage Loan Originators. If you are ready to begin the homebuying process, click here to get started!