First time buyer - would love some advice

[Anonymous]

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Message Edited by roxanna1974 on 03-01-2010 08:20 PM

[Lel]

Hi roxanna1974, and welcome to the FICO forums.

With your current income of about $42,000 per year, qualifying for an FHA loan in the neighborhood of $150,000-$160,000 might be a little tight, depending on property tax and insurance rates in your area, but it's theoretically possible.  You have an adequate amount saved up for the down payment and closing costs.

I'm a little concerned, however, about the changes that are coming in the near future.  You mention that your hours are going to be significantly cut for quite a bit of the next couple years.  That could pose affordability problems, since it looks like you stand to lose as much as a third of your current income.  You've got excellent financial discipline, and perhaps you might be able to save money up to cover the loss of income, but it still could lead to some difficulty.

The student loans - will they be due in full in 2014?  Or is that just when repayment begins?

[Anonymous]

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@Anonymous wrote:

Hi, here is my situation -

Income:

Full time job of over 2.5 years ~30,000 (currently a full-time masters student - grad in 2012 - current job is very stable and recession proof (I help those most affected by the recession!))

child support through summer 2013 ~12,000

Savings:

~25,000

Credit:

Excellent, but new (~2 yearsish - before that I didn't use credit for ~10 years or so) - estimated score b/t 700 & 725

Have 0 debt but will have ~$10,000 in low-rate school loans come due in early 2014 

No monthly payments for anything

I was wondering if now is a good time to buy b/c of all that is available for first-time buyers (and btw what all is available - I've only read about FHA loans), or if it would be better to wait until I graduate and then stock away my money then - if I wait, I will come out of school making b/t 40,000 & 60,000 w/ 0 student loans and probably only small savings at that point - but I can stock away the money quickly (right now I put away about $1100 a month and anything I earn above the $40,000 could go to savings).

I am only thinking about this because there is a house that I love in my neighborhood for sale - 169,000 but will probably go down quite a bit.

One other issue - from 09/10-05/11 I can only work ~24-30 hours per week and from 09/11-05/12  I can only work 20ish hours per week (because of internships).  I could push these numbers up if I wanted to see my child less

Thanks for the advice! 

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You might want to look into your local city/county offices as they could have downpayment assistance grants.  While I'm not sure if child support is used as income earned with these programs but it's possible that your salary with a child could be at or lower than huds medium income limit which would qualify you.  Check out hud.gov as they will have the info and numbers to call in your area

[Anonymous]

Here's a list of all 50 state's first time home buyer programs

Some states have significantly better programs than others.  Where are you? 

Separately, I was laughing pretty hard @ the recession-proof part of your post.

Best, 

Chris

[Anonymous]

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Message Edited by roxanna1974 on 03-01-2010 08:20 PM

[Anonymous]

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@Anonymous wrote:

Very cool, thank you!  Yes, that was a bit tongue in cheek  I do work with the homeless, however, and I am busier than ever  I live in NH, and believe I would fall under one of their programs; this program does not tell me exactly how it works - just says "The Single Family Mortgage Program provides first mortgage financing at below market rates, 30-year fixed rates, options with 1 point or with no points, low down payment requirements, cash assistance grants, and other flexible underwriting criteria."  - "1 point - 4.375%, 5.000% APR; 0 points - 4.625%, 5.173% APR; 0 points + grant - 5.250%, 5.835% APR" 

Now my impression of a point is that it's an extra amount of money you pay upfront to get a reduced interest rate?  I presume that is always the best bet?

I am meeting with a participating lender tomorrow to go over my options. 

      

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A point usually costs about 1% of the house price so if you found a house say for 120,000 your pt would cost you 1,200

[Anonymous]

Very cool, glad that link helped.  A point always costs 1% of the loan. Your state's program is pretty good with respect to rates, comparatively.  

If you don't need the grant/down payment assistance, they aren't always the best option.  There's a trade-off with the entire loan going up in rate.  The whole rate on the entire loan goes up and that can add up to more than the value of the grant.  Have the participating lender run those numbers--they should have a trade-off calculator already built.  Mine is for the Illinois Home Start and wouldn't really help you a whole lot.  

With points, the critical thing is that banks want to be paid now, later or both.  By paying a full 1% now, they'll give you .25% off every year.  That makes it a bad deal in years 1-4, somewhere in year 5 it is an okay deal, and then after that it becomes a good deal. 

Relocations for jobs, more children, children leaving the nest, etc. are all drivers of what to do regarding points.   Good luck with your meeting today!

[Anonymous]

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Message Edited by roxanna1974 on 03-01-2010 08:23 PM

[demo18c]

I would talk to a realtor. Thats what they get paid the big bucks for. Not to sound mean but no one here can tell you what to bid because we have no knowledge of your market area.

[Jazzzy]

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@Anonymous wrote:

Okay, so got my pre-approval - blah blah - went to look at it - it's awesome - so questions:

hazard insurance - ranges from?  I tried to do an online quote with my auto insurer but wouldn't let me - no dogs or swimming pools

water heaters/gas furnace - both 10 years old - how long do they tend to last, or is that on a case by case?

and then the big ? - how do I know what to bid???  - some info that might help:

house is $169,000 - on market for at least 111 days - just recently dropped by ~$12,500

buyers paid $178,000 in mid 2004 and put ~$10,000 worth of work into

appraised this year for ~$167,000 

sellers are motivated (but of course, there's a very interested buyer right now!!! - ha)

so what do I bid - I mean I know I can bid anything - but some ideas, thoughts into this?  Thanks! 

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How do you know the house appraised for $167k? Why did the homeowner have it appraised? Did you see an appraisal?

Make sure you determine if this was a real appraisal or simply a broker's opinion of value.