Paving the Way for Homeownership and Helping Buyers Achieve the American Dream

At Kentucky Housing Corporation (KHC), the state housing finance agency, we know that stable, safe, quality, affordable housing provides the best foundation for other successful life outcomes. Children do better in school and accomplish greater educational achievements. Housing stability produces health benefits and provides a foundation for career success. Homeownership also builds a sense of connection and civic engagement that strengthens neighborhoods and communities.

We also know that homeownership for first-time homebuyers can seem overwhelming. Just knowing where to start can be discouraging, but it does not have to be. KHC wants to empower those thinking about purchasing a home, first- or even second-time buyers, by breaking down information and offering tips on what should be considered to achieve the American dream of owning a home.

Fortunately, now is a great time to consider buying a home! Mortgage interest rates are still low enough to put homeownership within reach for many households. Home prices in Kentucky tend to be lower than the national average, making ownership even more attractive. Those who are renting may find that ownership is more affordable than they thought, especially in an environment of rising rents. Buying a home provides an opportunity to begin building wealth for a better future. Homeownership also gives families more control of their living space — from choosing paint colors for their bedrooms to adding pets to the household to getting a place where they can grill out in private.

Renters looking at homeownership for the first time often ask what is realistically affordable for them. This is a very important question, and a loan officer can help them determine a home price they can afford. By assessing income, debts (including student loans), assets, and credit score, the loan officer can get them pre-qualified for a home purchase up to a certain price that is within their budget.

For the past 45 years, our main line of business at KHC has been mortgage lending. Instead of directly originating loans, we use a network of approved lenders across the state to provide that personal evaluation for the homebuyer. KHC offers a variety of first- and second-mortgage products, some similar to products available in the marketplace. Other KHC products, however, are unique and provide that extra resource to help Kentucky families achieve homeownership:

Homebuyers should be aware that recently passed federal tax reform changes the tax advantage of homeownership. In past years, homeowners generally found that itemizing their tax deductions, including mortgage interest, gave them a higher tax refund than using the standard deduction. The new tax law doubled the standard deduction, potentially making it less beneficial to itemize deductions.

Buying a home is the single largest purchase that many families will ever make. Therefore, it is essential that buyers know what they are getting into. Affordable homeownership should be sustainable in all respects. Mortgages are typically 30-year, fixed-rate loans. Buyers should be wary of variable-rate loans because they introduce more uncertainty and potentially greater financial risk over the long term. Home buyers should also be careful to avoid loans that may have predatory characteristics such as high fees, high interest rates, or balloon loans that offer small monthly payments in early years but require one large payment to satisfy the loan.

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