USDA loan with first time home buyers tax credit

by Amanda
(Iowa)

I bought my house a year ago with a loan through the USDA. I also got my offer approved during the first time home buyers tax credit.

I am wanting to move in with my boyfriend who lives in another state. What can I do with my house? Can I just keep paying on it? I don't think I can rent it out.. I don't want to go through the trouble of selling. What are my options?

=====ANSWER=====

Hi Amanda,

Thank you kindly for stopping by my website and asking your questions. I love meeting new people here in my blog and sharing my knowledge with them.

You have a very unique situation here. For one thing, you received the tax credit when you bought your home. In some cases, this credit has to be paid back so you will want to check with your tax preparer and see if this is the case for you.

Moving out of state presents a whole other issue. If you let the house sit empty, even if you are making payments on it, your home owners insurance may not want to cover you because nobody is living there.

When you consider renting it out, yes it is a problem when you are not living nearby so you cannot monitor the condition of your property. In this case you may have to hire a property manager or ask a family member to keep an eye on it for you.

You say you don't think you can rent it out. If this is because you feel there may not be any renters, well that would be the job of the property manager.

You can keep paying on it, but again leaving it empty is not such a great idea.

Also, many first time home buyer mortgages have what is called the "due on sale" clause which applies in most all cases. This means if you did a rent to own, the lender could call in the balance of the mortgage if they found out. Chances are slim to none that your mortgage company would find out, but it is the fine print in many mortgage contracts.

What would I do if I were you? Hiring a property manager is most likely the route I would go. Hopefully the rent you collect is more that your monthly payment.

Selling it is the only other option, which may be a problem in this current real estate market.

I hope you find this helpful. If you do, please help spread the word about my website by liking us at FaceBook or Tweeting about us using the links just below.

I wish you the best.

Kind Regards,

Jeffrey Ragan