Gary Wisenbaker

The sentiment among consumers regarding homebuying is on the rise after mortgage interest rates peaked and began their decline back in December.

The Federal National Mortgage Association (Fannie Mae) reported that the home purchase sentiment index rose 2.9 points to 67.2 and year over year the index is up 6.2 points. This resulted from a shift in consumer perceptions of the direction for interest rates: roughly two-thirds of consumers surveyed believe interest rates will continue to drift lower or remain about the same.

And this, in turn, is reflected in the 22 percent increase in mortgage applications reported by lenders last week. That was the second increase in as many weeks.

In Georgia that trend is reflected by an increase of 1 percent in new listings (owners don’t list where there’s no buyers) and an increase of 7 percent in the average sales price, indicating a robust market. With more buyers looking in a relatively tight inventory, sellers can list with confidence and with mortgage rates normalizing buyers can buy with that same confidence.

Local, state, and national governments understand the importance of fostering stable communities and economies. In the realm of residential real estate, various government programs and incentives play a pivotal role in facilitating the journey to home ownership.

Getting the “apartment to starter home to larger investment home” equity-building conveyor belt is important and there’s a couple of ways government can help foster that growth without getting in the way: first-time homebuyer programs and tax incentives for homebuyers.

First-time Homebuyer Programs

For many aspiring homeowners, the prospect of purchasing their first home can seem overwhelming due to financial constraints. Recognizing this barrier, governments often implement first-time homebuyer programs aimed at easing the burden on new entrants into the real estate market.

These programs typically offer financial assistance, reduced interest rates, or down payment assistance to eligible individuals or families. These programs are often “needs based” (income based) but those income base levels have risen over the past couple of years.

One common feature of these programs is the provision of low-interest loans or grants to help cover a portion of the down payment or closing costs. This can significantly reduce the upfront financial burden on first-time buyers, making homeownership more accessible. Many programs may offer educational resources and counseling services to guide buyers through the complexities of the homebuying process.

On the private side, many sellers will consider contributing toward closing costs without regard to the financial situation of the buyer. This contribution may also be used in many instances to “buy down” an interest rate for a period of time. Some lenders are now offering similar “buy down” in-house programs as well.

Tax Incentives for Homebuyers

This is exclusively in the government’s domain.

Tax incentives represent another crucial dimension of government support for prospective homebuyers. These incentives are designed to make homeownership financially advantageous by offering tax deductions or credits related to mortgage interest, property taxes, and other homeownership expenses.

One prominent tax incentive is the mortgage interest deduction, which allows homeowners to deduct the interest paid on their mortgage from their taxable income. This deduction can result in significant savings for homeowners, especially in the early years of their mortgage when interest payments might be higher, depending on your loan package.

Property tax deductions are another common feature, enabling homeowners to reduce their taxable income by deducting the amount paid in property taxes. This not only provides immediate financial relief but also encourages property ownership by making it more economically feasible.

First-time homebuyer programs and tax incentives play a crucial role in making homeownership a reality for a diverse range of individuals and families. By alleviating financial barriers and providing tangible benefits, these initiatives contribute to the creation of vibrant, stable communities and empower citizens to build a secure and prosperous future through property ownership.

Your lender will know what’s out there and have a variety of programs to meet almost every need.

So, check with your lender, get your prequalification letter, and join those submitting mortgage applications!

Gary Wisenbaker (#garysellsvaldosta) is a REALTOR® with Century21 Realty in Valdosta, and can be reached at (912-713-2553) or gwisenbaker@C21realtyadvisors.com