Agent: For First-time Homebuyers in Sammamish and Elsewhere in State, Credits are Still Available

First-time homebuyers often approach buying with trepidation. Questions can be answered and concerns addressed with just a little research and help from a qualified Realtor and a knowledgeable mortgage representative. Options are available that can help buyers with limited funds to enjoy the benefits of homeownership.

Two options offer assistance.

If you thought that credits were no longer available to first time homebuyers, you are mistaken. When the $8,000 federal tax credit expired last year, many gave up hope not realizing that a beneficial tax credit was still available. A first-time homebuyer is classified as anyone who has not owned a home for three years. This opens the door for many who sold their home a few years ago and are now ready to look at home ownership.

The Washington State Housing and Finance Commission offers a loan enhancement which can be used with VA, FHA and conventional loans. The Mortgage Credit Certificate (MCC) is not a mortgage, but the buyer can receive a 20 percent tax credit on the annual interest paid over the life of the loan. The loan officer will set the conditions of the loan then present a prepared package to the Commission for review. This MCC is available for the life of the loan as long as it is owner occupied.

An example: A $200,000 loan at 5 percent interest would result in a $2,000 tax credit. This credit can be taken year end, when taxes are filed or adjustments can be made to W-2 deductions and the buyer can increase their take-home pay by $166 per month.

Karen Buckley, a loan specialist with Evergreen Home Loans, uses the MCC often with her first-time buyers. "It's a great program enhancement. I've used it many times when a buyer really wants a home but feels that it's a bit too much payment to swallow. I make sure that all of my first time homebuyers are made aware of this program. This is truly a gem!" she said.

The House Key State Bond loan program is available to first time buyers and also to buyers of homes in targeted area.  These areas are tracts in Washington State meeting federal guidelines as economically distressed. Participating lenders offer conventional loans at a below market rate. There are also down payment assistance programs. A buyer can add all finance charges to the mortgage or there can be co-signers and gift funds can be used for the down payment and for closing costs. According to Lysa Catlin, branch manager of Windermere Mortgage Services, "This program enables first-time buyers with good credit but limited funds the opportunity to own a home with no money down."

As in all instances, guidelines must be met without exception. In King County, both of these programs set qualifications at income levels of $90,000 and single family residences cannot exceed $450,000. Anyone who is listed on the Deed of Trust must take a homebuyer education class before the loan is closed. Not all loan officers are qualified to offer these programs. The Washington State Housing Finance Commission’s website offers detailed information on these programs, including a list of qualified lenders.

When asked what was one of the biggest problems facing first-time homebuyers, Phil Mazzaferro, senior mortgage adviser with Absolute Mortgage in Issaquah, stated: "What I find about first-time homebuyers are that they don't necessarily have bad credit but sometimes can have a lack of credit. What that means is that they may not have enough trade lines (credit card or other loans that show history) to satisfy a bank or lender on some of their conforming programs. It is very important that a first-time homebuyer know what their credit looks like and what their credit scores are so we can tailor the right program that will give them the best chance for loan approval."

Weekly interest rates

Conforming (loans amounts up to $417,000)
30-year-fixed: 4.75 percent
20-year-fixed: 4.625 percent
15-year-fixed: 3.875 percent 
5/1 ARM (adjustable rate mortgage): 3.125 percent
5/1 ARM (adjustable rate mortgage) interest only: 3.875 percent 
7/1 ARM (adjustable rate mortgage): 4.125 percent

Joan Probala is the managing broker for Issaquah Windermere (Windermere Real Estate/East Inc.). She has 30 years of experience in real estate, construction and sales. Previously, she has written about credit scores and mortgages, among other topics.

Editor's note: Interest rates for home loans change daily. Bankrate.com lists a graphing tool to see different types of mortgage interest rates for up to the past five years. Bankrate also has a section that asks people shopping for homes: How much house can you afford?