Looking to get mortgage first time home buyer

[bdsams]

As the title states Im nearing the time that Ill be purchasing my first home! While im finally excited to not be renting, I need to get a mortgage and in this economy I am not quite sure what to expect.

Firstly my fiance, who will be my wife by this spring ( home buying time) and I pull in about 74k a year...we both graduated college in May.

Credit History, spotless

Neither of us have any credit card debt
The only "debt" is that she has 9k to pay on school loans

My credit score is 750+ last time I checked... I did take a out a loan for 3.5K to pay for her Ring but paid it off in 6 months ( was a 12 month loan)...

As it stands right now we have about 6k in a CD that has been our reserve fund that could be used as a down payment. Our monthly expenses are as follow:

Rent 895.00 (gone when we buy a home)
Electricity: 110 (approx avg)
Insurance: 600 every 6 months
Water 100.00 every three months
Cable- 85.00
Cell phone 60.00 ( for both of us)
Average monthly balance is about 600.00 for our one CC, paid in full each month


My question is, if were looking to be in a house by april/march, when should we goto the bank to ask for a loan? What kind of interest rate am I looking at? A quick google search shows 6% for a 30 year fixed ( im not doing ARM or anything other than fixed) is this applicable to a first time home buyer?

Also, I know there is a tax credit of up to ( i think) 7500 for first time home buyers, is that a good thing to take even though you have to pay it back?

[maat55]

You should go and get pre-approved before you shop for a house. But that does not mean you should buy as much house as they say you can.

You need to talk to your fiance and establish a financial plan, first. Discuss things like:

What % of our income will go to housing?
How long a note will we take out?
Will we live on one income?(very important, concerning future children)
Are we going to start saving at least 10% as a priority before housing?
Should we have more down payment?

I would not use the credit. You should have your own down and closing costs. In many cases, you can get the seller to pay the closing. You should also save at least 10%(20% preferably)down payment.

There is no hurry, take your time and do it right. The market will remain low for some time and might dip lower next year. I personally would just sit and save for a while and let this market improve.

[disneysteve]

What price range of home are you thinking about? Other than the $6,000 CD, what do you have in savings?

You should have a bare minimum of a 3-month emergency fund. Buying a home, you really should have more, like 6 months' worth. Remember, once you buy that house, there will be new expenses that you don't currently have as a renter like lawn care, maintenance, window treatments, furnishings, etc. And your down payment should be 20%.

Your current expenses are about $2,000. That means your $6,000 CD is a 3-month EF. That's a good start, but you can't use that money toward your down payment because then you won't have an EF unless there are other savings in place.

I agree with maat55. Don't rush into this. Take the time to save up a down payment and emergency fund BEFORE buying a house.

[bdsams]

the 6k CD is our backup money at the current time, we have about 3k in our savings/checking accounts right now

We are looking at house no more than 200k but more likely in the 150k range.

The thing i am having trouble finding out is when can i claim the 7500 tax credit? Do i have to wait until the following year after i buy a house to get it or can I claim it this year, in april, and use it towards the down payment ( ideally)

[disneysteve]

The thing i am having trouble finding out is when can i claim the 7500 tax credit? Do i have to wait until the following year after i buy a house to get it or can I claim it this year, in april, and use it towards the down payment ( ideally)

This might be helpful (from Federal Housing Tax Credit for First-Time Home Buyers: Frequently Asked Questions)

"Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2008 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the future home buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment. Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties."

[momof1in150]

The thing i am having trouble finding out is when can i claim the 7500 tax credit? Do i have to wait until the following year after i buy a house to get it or can I claim it this year, in april, and use it towards the down payment ( ideally)

If you buy a house is 2009 you can get the tax credit when you file your 2008 taxes. You start paying it back when you file your 2009 taxes. The house you buy has to be more the $75,000 and you must buy before June 30, 2009. There might be some changes coming as the National Association of Realtors is trying to get congress to change some of the terms.

If you PM me your e-mail I can send you a .pdf detailing all of the specifics of the tax credit.

[disneysteve]

The house you buy has to be more then $75,000

The NAHB site that I linked above doesn't mention a minimum purchase price, not that it is all that relevant because other than a mobile home, there aren't many houses that are less than 75K.

[momof1in150]

The NAHB site that I linked above doesn't mention a minimum purchase price, not that it is all that relevant because other than a mobile home, there aren't many houses that are less than 75K.

The $7500 credit can't be more then 10% of the sale price of the home. It can be for less but you will get less of a credit.

[disneysteve]

The $7500 credit can't be more then 10% of the sale price of the home. It can be for less but you will get less of a credit.

Yep. I see that now. So the house doesn't have to cost over 75K but if it costs less, you won't get the full $7,500 loan.

BTW, I have no clue why they call this a tax credit. It is NOT a tax credit. It is a zero-interest loan.

[momof1in150]

Yep. I see that now. So the house doesn't have to cost over 75K but if it costs less, you won't get the full $7,500 loan.

BTW, I have no clue why they call this a tax credit. It is NOT a tax credit. It is a zero-interest loan.

NAR (National Association of REALTOR) is trying to lobby congress to make it a true credit. I don't know if I agree with it. I would prefer that it be a loan and make the money available to others as it is paid back.

[maat55]

NAR (National Association of REALTOR) is trying to lobby congress to make it a true credit. I don't know if I agree with it. I would prefer that it be a loan and make the money available to others as it is paid back.

I personally think that the government needs to buttout on this one. It appears that the goverment thinks it is the US economy.

[ScrimpAndSave]

Woops posted this in the wrong area!