Buying your first home alone-after a divorce/breakup

"Image courtesy of Ambro / FreeDigitalPhotos.net".

“Image courtesy of Ambro / FreeDigitalPhotos.net”.

I had someone ask for a family member how they can buy a home. The person buying supposedly has a great credit score, works and makes enough to buy the home they are seeking. They were denied a home loan from a lender that I had never heard of but with all listed they should have been approved. I asked the person was this the buyer’s first home or an investment property and that is when I was informed that the buyer was married!

Image courtesy of Salvatore Vuono / FreeDigitalPhotos.net

Image courtesy of Salvatore Vuono / FreeDigitalPhotos.net

She still owned a home together with her husband even though they plan on never getting back together. I let the person asking know that is the reasoning behind her denial. She owns a home already and until she removes her name from that house, she will not be able to buy a home as her “principal residence”. Why, you ask? The answer is this-she already has an interest in a property and until she gets rid of that interest, she can buy another home but only as a second home or as an investment with higher interest rates. I advised her to check with an attorney but that it will take either a legal separation or divorce, make hubby refinance and pay her share of the equity out to her for this to be right. Then she is also removed from the loan on the property and no longer responsible for the debt.

Image courtesy of renjith krishnan / FreeDigitalPhotos.net

Image courtesy of renjith krishnan / FreeDigitalPhotos.net

That can then give her the keys to her own home.

Tax Time Cometh….

This post is for the First time Homeowner.

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Image courtesy of phanlop88 / FreeDigitalPhotos.net

You will still feel in a daze and confused as to what just took place.”I just bought a house and I owe on it for 30 years. I JUST BOUGHT A HOUSE, arghh!”

You will still have items coming in the mail or should (if you changed your mailing address). We will go over one of these documents you will receive around tax time (right now) from each of your lenders that you paid any points and interest to. It is the 1098 mortgage interest form.

At beginning of next year after purchasing your home, you will receive a 1098 tax form showing the amount of Points and Mortgage Interest paid during closing (of $600 or more). Save this form and place it with your W-2 and any 1099 forms you receive.

1098

Also shown on your Settlement Statement (aka HUD or HUD-1) or as I like to call it “your big receipt”. You can verify the numbers with your HUD since they are listed there as well.

This form comes in handy if you itemized your deductions on your tax return. If not, still take this form with you to the Tax Preparer office. You might have other items you can use to deduct and still itemize.

Being able to use the form 1098 can save you a lot of money and cause a refund at tax time or lighten load paid to Uncle Sam.

Also, every year for as long as you have the loan, you should receive a 1098 form if you paid mortgage interest (including points) of $600 or more .

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Image courtesy of ddpavumba / FreeDigitalPhotos.net

NOTE: I am NOT a Tax Advisor or CPA and I advise you to speak with one to gather whether it will benefit you personally to itemize or take a standard deduction. All information is just to be helpful =:)