How To Reduce Closing Costs in Alabama
Do you finally have the money to buy that dream house in Alabama? You can do one better and find an upgraded version of the home in your head. You can do that by saving up on closing costs in Alabama. If this isn’t your first time in the real estate rodeo, then you know that these fees add up. So reducing closing costs will give you additional funds to either go for a better home or add special touches to the one you’re buying. Either way, a discount will go far for starting your new life in The Yellowhammer State. Choose Craftsman, Beaux Arts, Colonial Revival, Federal Architecture, and more. But let’s worry about getting the closing cost discounts first. There are a couple of ways you can do this. You can use the tax exemption route or opt for the home-buying assistance the Alabama Housing Finance Authority offers.
Saving On Alabama Using Tax Exemptions
Many taxpayers don’t realize they’re qualified to contribute towards a special savings account for closing costs and down payment. This saving is Alabama’s First Time and Second Chance Home Buyer Savings Account. Basically, any contributions made by single taxpayers amounting to $5K and by married couples amounting up to $10K are tax-exempt and may be deductible if they check off all the requirements. The availability of deductions last for the five years deposits are made into the account. Single taxpayers are entitled to $1.5K worth of personal exemption. But taxpayers filing head of family and joint statuses can get up to $3K. Part-year residents are also qualified to receive exemptions up to the full amount. A student or dependent can claim the personal exemption even if it was claimed by someone else. Alabama defines a dependent as an “individual other than the taxpayer and his or her spouse who received over 50% of his or her support from the taxpayer during the tax year and is also related to the taxpayer.” They can also be any of the following:
- Son
- Stepson
- Son-in-law
- Daughter
- Stepdaughter
- Daughter-in-law
- Legally adopted child
- Stepmother
- Mother-in-law
- Stepfather
- Father-in-law
- Parent
- Grandparent
- Brother
- Stepbrother
- Brother-in-law
- Sister
- Stepsister
- Sister-in-law
AHFA Assistance For Closing Fees in Alabama
In addition to the Step Up program for downpayment assistance, the AHFA also offers a closing cost grant. There are several requirements for anyone to qualify. For example, converting qualifying income to an annual basis should be at most 80% of the property location’s Area Median Income (AMI). So what are the other requirements to be eligible for the assistance program? We’ve listed them below, so you can skip going through pages of information online to get answers.
- The assistance program applies to both existing and new Alabama homes.
- A property buyer needs to have a credit score starting at 640.
- Home buyers have to have a 45% or lower debt-to-income ratio (DTI ratio)
- Anyone seeking assistance from the AHFA must take and finish a homeownership education course.
- Loan assistance must be made through partner lenders.
Homeowners can use this assistance program with a mortgage credit certificate to increase their saving potential.
By lowering your costs, you can raise yourt standards. Click on the link now for a more detailed look into closing costs in Alabama: https://inlandbayrealty.com/foley-alabama-closing-costs/