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First-Time Homebuyer programs (in Minnesota)

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Anonymous
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First-Time Homebuyer programs (in Minnesota)

Hi everyone. So this is my first post but I've been a lurker for a while. I have learned some great information from a lot of people here and this board has been a great resource for me, so first of all - thank you to the regulars here who selflessly help others. It really is appreciated.

 

About me - I'm 39 and after a series of moving to different areas around WI and MN I'm finally ready to get off the rental boat and purchase a house to call my own. I have gone through the process of repairing my credit - for years I just didn't really pay attention to it, really. In the last 2 years I just smartened up, realized that I might hate the game but I was just hurting myself by denying that keeping good credit was vital in today's world. Instead of chains, if done right it can be freedom... or maybe I just gave in to the brain washing. Smiley Happy That's weird to type on a FICO webpage, but it's true. Anyway... My scores were probably in the low 500's 2 years ago. I had a Cap One judgement, a small collections, and a lot of missed payments over 3 cards at the end of 2011. I ended up closing one card and got current with the other. I didn't want to close it because I had it for 10 years at that point. I was able to get a Cap One Auto loan with a 19% interest rate. Now 3 years later, the judgement is falling off in May, I haven't been late for any other card (thanks YNAB) and in November of last year opened a $3000 CL Cap One Quicksilver One card. I pulled my 3 scores and my Middle mortgage score was 655! I think if I paid off the cards to $0 and after the judgement completely falls off, I'll be close to 700 average on the 3 CRs.

 

I've worked with a lending broker and as of Wednesday, I have been pre-approved on an FHA loan for more than I feel comfortable paying on a monthly basis! I'm pretty stoked. So now that the broad work is done, I'm getting into the details. As a first-time home buyer, I'm able to qualify for the programs that Minnesota makes available for down-payment assistance. They are great, but I'm uncertain on what I should do and I'm turning to the board here directly for advice.

 

So here's my conumdrum - MN offers both a standard loan for DPA that would cover downpayment and closing costs. This has a 10 year term with monthly payments. They also have a Deffered variety with 0% interest and no payments - just needs to be paid off when moving, paying off, or refinancing the house. The first loan type - the standard - I would also be able to get a Mortgage Credit Cert taking $2000/year off taxes. The deffered loan doesn't offer that option. I can't say where I'll be 10 years from now, but I do know I'll be pushing 50 so it's possible this first house might also be my last, in which case I could be there when I'm 60. Is it better to take the MCC and have higher montly payments for 10 years, or deffered without the MCC?

 

The other question I have is that if I have the option to do an HFA (Fannie Mae) Preferred Risk Sharing loan instead of an FHA loan, should I do that? I'd still be able to do the MCC but I don't think the Down Payment Assistance is then available.

 

Thanks in advance!

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