What Does the New Tax Law Mean for First-Time Buyers?

With significant changes to the tax code taking effect this year, homeowners and prospective buyers are revising their plans to take advantage of its sweeping changes. Here’s an analysis based on information from the National Association of Realtors and NerdWallet.

Tax Rate Reductions. Joint filers with incomes of $77,400 to $400,000, which will include most first-time buyers, will see their tax rates decline from two to four percent when they file their 2018 taxes next year.

Mortgage Interest Rate. Changes in the mortgage interest rate—lowering the cap to mortgages worth one million to $750,000 from 1 million and excluding interest paid on home equity loans—would affect only the wealthiest first-time buyers directly. The changes will make second homes and equity loans more expensive for first-time buyers in the future. keep reading

Do Low Down Payments Make Mortgages More or Less Affordable?

File this question under “it depends.”

It’s true that loans with down payments of 20 percent or more cost borrowers less over time than low down payment loans. Low down payments leave larger principals to pay off, and those principals create more interest over time. Low down payment loans also require mortgage insurance.

However, a low down payment itself can actually boost affordability by getting you off the sidelines and into a home of your own sooner. keep reading

Report Recommends Raising Consumer Awareness of Down Payment Assistance

A new report on credit access and affordability by the Urban Institute’s Housing Finance Policy Center commissioned by Down Payment Resource and Freddie Mac shows how many homebuyers could have taken advantage of down payment assistance and other affordable lending programs in 2016.

The Barriers to Homeownership: Down Payments, Credit Access, and Affordability report  provides data and commentary on three significant barriers to homeownership: saving for a down payment, accessing mortgage credit and housing affordability.

The report also offers information about down payment assistance programs which can help borrowers overcome that barrier. It includes an interactive map of the U.S. which allows users to compare 16 housing market factors, including homeownership programs, between states.  keep reading