Recent Divine Discussions

Saturday, January 17, 2009

Home Purchase Plan


The home I want:

Price: $0 -> $190,000

Ideal Monthly Mortgage (including taxes, PMI, HOA, & hazard): $1200 (max $1300)

Location: Surrounding Orlando Area

Bedrooms: 3+

Bathrooms: 2+

Square footage: 1700 s.f. +

Year Built: 2000+

HOA: $100/month max


* A-rated school district
* Quick access to major highways
* Good daycare
* Nice neighborhood
* Shower stall
* Backyard
* Large kitchen with pantry and lots of cabinet space
* Large master bathroom
* Walk-in closet in master bedroom


* Garden tub
* Family room and living room
* New stainless steel black appliances (a girl can dream can't she!)

Based on my research, an FHA would be the best loan for me to get. I chose to go this route because of the lower interest rate (currently 4.6%) and the lower required down payment (3.5%).

The following is basic loan qualifications for an FHA loan:

- Two years of steady employment (preferably same employer)

- Last two years of income should be same or increasing

- Minimum credit score of 580 and no more than 2 thirty day lates

- Bankruptcy two years or older (if applicable)

- Foreclosure three years or older with perfect credit since

- New mortgage payment < or =" to">

- 3.5% down payment

Here is how I stack up against the requirements:

- Two years of steady employment (preferably same employer). Check. I have 5 years of steady employment. Even though I have had 3 employers, they have all been on the same contract.

- Last two years of income should be same or increasing. Check. As most of you know I have increased my income by $25,000 over the past 8 months.

- Minimum credit score of 580 and no more than 2 thirty day lates. Check and check. My current credit score is 707 (Experian) and I don't have any late payments on my report.

- Bankruptcy two years or older (if applicable). N/A

- Foreclosure three years or older with perfect credit since (if applicable). N/A

- New mortgage payment < or =" to"> Check. The mortgage payment on my max price is 25% of my gross monthly income.

- 3.5% down payment. Almost there. The maximum down payment I am looking at is $6650. I currently have $3000 saved. I will have an additional $4050 saved by April, giving me a total of $7050.

I applied this past Friday and was pre-qualified for loan up to $300K.

I am looking into the 1st Time Home Buyer Tax Credit Program.

Facts on the programs:
  • The tax credit is available for first-time home buyers only.
  • The maximum credit amount is $7,500.
  • The credit is available for homes purchased on or after April 9, 2008 and before
    July 1, 2009.
  • Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
  • The tax credit works like an interest-free loan and must be repaid over a 15-year period (starting two years after you buy your home).

I meet all the requirements to receive the credit except for the home purchase prior to July 1, 2009 but that is in the workings. I read through the FAQs on the website and it says that I can claim the credit on my 2008 tax return on a home I buy in 2009 (obviously as long as you bought the home before the last day to file taxes 4/15). If that is the case then I would be able to get an additional $7500 on my 2008 tax refund. I am going to confirm this on Monday and if everything is what it seems then I will most likely wait to do my tax return so that I can claim the credit.

I know some of you guys might have concerns or questions about my HPP so let me see if I can alleviate some of them. I expect the seller to pay all closing costs. I don't plan on buying a "handy-man" special but if the house does need any repairs then I will request that the seller have those handled prior to closing or provide a repair allowance to be given to me at closing.
And I am not worried about having money right when I move in to furnish my house. Its not like I don't have furniture. I am hoping to close on a home by April 15 at the latest (my lease ends April 30th). I'll then have about 45 days until my 1st mortgage payment is due. If I needed to I could use the money I would be saving from having no mortgage or rent due. I also have a $300 deposit on my apartment that will be refunded and some others sources of income that will be trickling in.

Anyhoo that is my plan. Think its a stretch? You don't know me very well do you? I'll keep you guys posted.


Fabulously Broke said...

You've really done your research. If you don't mind, I'm taking your structure and making notes so I when I buy my future home I can follow it.

Did you ever think about having a grocery store or quick amenities near by? Or not a big deal?

Fabulously Broke in the City

"Just a girl trying to find a balance between being a Shopaholic and a Saver."

Anonymous said...

Hi, I am a recently divorced home owner and although I love my house there are a few things we didnt really factor in when we first bought the house that add to my monthly budget (you may have already considered these but some people didnt like me:)yard maint( if you have to pay to mow or can do it yourself), termite bond, pest maint, qtrly HVAC, AC maint,gutter cleaning etc.
Happy House hunting

Dimples said...

@ Fab Broke

You know I am a researching fool. LOL! I need to have a strong understanding of what I am about to get into before I make any moves.

And yes I took into account a grocery store and quick amenities. I can't live in the boondocks away from civilization. The first home I saw on Wednesday was like that. Ugh!

@ Anon

Yes I took those into account. I actually created a mock budget to see what mortgage payment I would be comfortable with. I included home maintenance at $50 per month in there. I am a do-it-yourself-first person and I also know a number of experienced handymen. So the $50 is a estimate on supplies.

Thanks for the info. :-D

Dimples said...

@ Fab Broke

And you can definitely use my plan. Just modify it to fit your needs and wants and situation. Do you like I always say.

Sistah Ant said...

It looks to me like you have put a lot of thought and self-education into this. I just did what you're about to do, and based on my experience, it seems like you have a realistic viewpoint of what's within your reach. Good luck finding the right place. And COMPARE preapprovals and the interest rates they quote you.

Sistah Ant said...

Oh. And. $50 a month isn't bad, but you don't know what you'll want to change when you move. Even cosmetic changes cost money. Make sure you have a good savings left over after putting your down payment down, but it probably won't be $50 in the first month or so, though it will probably less than $50 after that.

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