Purchase
Getting a mortgage loan for purchasing a property should not be intimidating. We have your back whether you are purchasing a new-build, single-family residence, townhouse, condo, vacation home, or investment property. Our knowledgeable team is here to support you every step of the way, from helping you determine which loan is right for you; to securing a mortgage pre-approval; and ultimately closing your loan on time. Obtaining a mortgage for your next home has never been easier.
First-time Homebuyers
First-time home buyer is an individual who meets any of the following conditions:
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Reside in the subject property as their primary residence.
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Has has no ownership interest in any residential real estate during the past three-years from the purchase date.
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A displaced homemaker who has only owned a home with a spouse.
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A single parent who has only owned a home with a former spouse while married.
There are benefits and loan programs available for assistance with the down payment and closing costs that a first-time home buyer can take advantage of, such as:​
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Low or no down payments from 3% to 0%.
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Down payment assistance (DPA) programs that may cover part or all of a home buyer's down payment and closing costs.
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Federal, state, and local grants.
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Primary Residence
A primary or principal residence is the dwelling where you live all or most of the year. If you alternate between two properties, the property which has been used the majority of the time during the year will be considered your primary residence. A primary residence is considered to be a legal residence for the purpose of income tax, and acquiring a mortgage.
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Benefits of a primary residence
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Tax deductions – Mortgage interest and private mortgage insurance (if applicable) may be tax deductible on your annual income tax return (form 1040). Speak with your tax advisor to determine if you can itemize these deductions on your tax return. Generally, the total of itemization should exceed the standard deduction limits. (Please check the IRS’s website for the most current standard deduction limits).
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Capital gains – Generally, when you sell real property you must pay long-term capital gains. However, if the property is your primary residence, you may qualify to exclude or reduce paying this capital gains tax through the Primary Residence Exclusion. According to the IRS, you can exclude your profit by $250,000.00 if you are single, or $500,000.00 if you file jointly as a married couple. (Please check the IRS’s website for the current limit amounts).
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Mortgages – You will most likely get a better interest rate when borrowing money to purchase your primary residence. You also have the flexibility to put less down payment than if you were purchasing a second home or an investment property. Lenders also typically require fewer stipulations when purchasing a primary residence property.
Vacation Home
A vacation home is also referred to as a second home. It is used primarily for recreational purposes, including vacations and holidays. It must be occupied by the owner for some portion of the year and be suitable for year-round occupancy. The owner also must have exclusive control over the property. A vacation home is often located in a different location than the primary residence and is restricted to one-unit dwellings.
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Benefits of a vacation home:
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Tax breaks – Like the primary residence, you can use the mortgage interest and property taxes as deductions on your annual tax return if the property is used as a true second home. Always speak to your tax advisor to determine your eligibility.
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Rental Income – You can generate a rental income from a vacation home while you’re not occupying it. It could be an excellent way to earn extra income.
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Long-term investment – There is a good chance a vacation home will retain its value and appreciate.
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Convenient and comfortable – Having a vacation home allows you and your family to easily take getaway trips and create great memories.
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Prepare for retirement – If you are planning to retire, a vacation home can be a head start while making an easy transition, financially and geographically.
Rental property
An investment property is real estate property that is owned but not used as a primary residence. It generates income that is typically called rental income. Generally, there are three types of investment property, such as residential, commercial, and mixed-use. Residential properties are the most popular investment.
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Things to know when purchasing a rental property
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Mortgage – Acquiring financing for a rental property can be more challenging. Typically, lenders will require a more significant down payment such as at least 20% of the purchase price, good credit scores, and sufficient savings to cover the reserve requirements after closing.
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Tax implication – If you collect rental income from an investment property, you must file it on your tax return to the Internal Revenue Service (IRS). Similarly, when you sell an investment property, you are also required to file the capital gain to the IRS.
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Financial stability – Besides paying the initial down payment, and closing costs, you should have enough money in your budget to cover regular maintenance and emergency repairs.
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Return on Investment (ROI) – You need to do your homework on the Return on Investment. It is the key measure of the profit derived from your investment. It is a ratio that compares the net return of investment (either gain or loss) relative to its cost.
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Property management – You will need to manage an investment property, from finding suitable tenants and complying with all regulations to performing maintenance which may include hiring contractors for any repairs.