Buying Your First Home
Purchasing a home is a daunting process, and doubly so for a first time home buyer. For most people, buying their first property is the biggest investment they’ll ever make–not to mention all the lender payments and fees to worry about.
What is a First Time Buyer?
First-time homebuyers are often at a disadvantage to other buyers, due to having low funds, student debt, or other financial issues. Thankfully, being a first-time buyer has some benefits too, such as being eligible for lower interest rates, smaller down payments or even down payment assistance.
According to the Department of Housing and Urban Development, the following qualify as first-time home buyers:
A person who has not owned their principal residence for at least 3 years.
A single parent who previously co-owned a home while married.
A homemaker who previously owned with a spouse, but no longer receives financial support from that spouse.
A person who has only owned a residence not affixed to a permanent foundation, such as a mobile or trailer home.
Not a First Time Home Buyer?
A second home and investment property differ in the following ways:
A second home is a property you purchase for enjoyment purposes and live in or visit during part of the year. It is separate from your primary residence.
An investment property is one you plan to rent out with the goal of generating income.
A second home is a property that you plan to live in for a part of the year or use at least 10% of the days that you rent it out.
An investment property is a property that is purchased to generate rental income and is occupied by tenants for the majority of the year.
An investment property is a property you buy to generate income like to rent to tenants or flip and sell for a profit. Meanwhile, a second home is a property that you intend to reside in for part of the year or visit periodically.