Hey guys looking to buy my first home. I have no idea where to start. I like the current markets and hope to be able to buy a home next summer or fall. The houses that were way out of my reach 2 years ago and well within my reach now. What should I be looking into for mortgage options. I need some guidance from the pros!
Here is my financial info:
Job: Software Engineer
Location: South Florida
Current Housing: Rent $700/month
CC limits: 2,500 / 10,000 / 6,000
Length of history: 3 years 6 months
FICO: 740 average
I have nothing bad on my report and have almost always paid in full (no lates etc). I didn't have any student loans since my college was paid for up front by my parents. I also have a perfectly fine car and was paid in full up front. So basically I don't have any history other than my CCs. Basically I am saving tons of cash while still maxing my Roth IRA and 15% into my 401K. I will have around $40,000 by next summer in cash reserves. I am intrigued by these FHA loans that I know nothing about since they are 3.5% down payment. I would like to put as little down as possible to be able to have a nice reserve.
The type of house I'm looking for is a single family home. Preferably 3 bedroom 2.5 bath 1,600-2,000 sqft. I like the ability of having the option to have a friend rent from me and still have an office. Price range around 325,000-375,000. Is this even possible for me to get a mortgage for this amount. I don't want to buy a home unless it's one I want and would enjoy living in for a long time. I'm in no hurry so I have options.
First off, it sounds like you are laready doing pretty good.... Congrats.
I will assume that the job history is stable, etc.
You can probably get approved in the lower end of that neighborhood but may have to put down more than 3.5 % to do so. That would be very high DTI. The high credit score, high reserves, and solid income will help that alot, but to get over 300K on 74K income you are basically at the 40+%DTI just for housing. That said, I would try to buy prior to the end of the tax breaks. I would put the 3.5% down along with another 7500 in cash (negotiate the seller to pay closing costs) Then you could take the 7500 tax break (it's really a zero interst loan if you check into it) and replenish your reserves at the end of next year. You get a lower payment, a easier qualifying, and take little reallong term financial hit in doing so.