Help a First Time Homebuyer Understand If It's Even Possible...

Here's my situation and would love any and all advice!!

Two professionals
Renters
Good Credit
Little to no savings(spenders)
401K(spouse)
TRS and TDA(me-city teacher)
VERY little down payment unless we can use $ from our retirement funds (and don't want to do loans-where we'd pay back) (Is that even possible?)

Can we possibly do this?

Where do I begin?

Can a family member slip $ into your account to show you have some?

I'm 39, it's time to buy!

Help, we make a great combined salary, this has to be possible, no? I know the big thing is the zero savings and a few credit card debts and of course we have other normal type bills.

Thanks

Message edited 7/10/2013 2:44:18 PM.

Re: Help a First Time Homebuyer Understand If It's Even Possible...

Your biggest issue will be a down payment. Very hard to get 100% financing these days. But as first time home buyers you should go for an FHA loan, I think it's called. It will allow you to but very little down, like 3%. You can get the money gifted but it is a pain in the ass from what I have heard. I would suggest looking into the FHA and start saving, now, to buy in 1-2 years. If you can borrow from your 401K that is an option but you will ave to pay it back and some people would rather just leave that money alone. Talk to a mortgage broker to see what your best bet is. GL!!

Help a First Time Homebuyer Understand If It's Even Possible...

We took money out of 401K which is basically a loan to yourself and the payment comes out automatically from your paycheck to repay it.

We were in the same boat and if it were not for the our 401k, we would not have a house today. We closed 2 moths ago on a short sale.

The bank will verify for the past few months showing money to and from and prove why the money is thier, where it came from etc..

Re: Help a First Time Homebuyer Understand If It's Even Possible...

your family can "gift you" $ it has to say gift so the bank doesnt think u have to pay that money back to the person

Re: Help a First Time Homebuyer Understand If It's Even Possible...

Message edited 7/10/2013 12:04:33 PM.

Help a First Time Homebuyer Understand If It's Even Possible...

Your family can either gift you the money (they would have to fill out a form that states it is a gift) or you can link bank accounts and have a letter stating you have access to all the funds in all joint accounts. You have to explain anything that is over $1000 deposited (at least that's what we had to do both times).

Try for an FHA loan! GL!

Re: Help a First Time Homebuyer Understand If It's Even Possible...

Def try for FHA. That's what we did. We had money gifted and our bank told us that it needs to mature for 3 months...

Only thing that really stinks with FHA is the PMI. We're paying an additional $500 per month over a min of 5 years! That's an extra $30K just to do FHA. Ugh, makes me want to vomit!

Re: Help a First Time Homebuyer Understand If It's Even Possible...

I would recommend just speaking to a reputable, knowledgeable mortgage lender -- and I can recommend a couple who I trust and who are very good with first time buyers -- to find out if you can be qualified now, and if not, what you have to do to be qualified. That way, you are not just speculating, but you know what the situation is re: your specific financial situation. Sometimes when buyers go to get qualified, they realize there are some issues they weren't even aware of (and old loan or medical bill that was paid off but still shows on your credit, for example) that needs to be addressed before they move ahead.

As others have said, you can do an FHA loan with a minimum of 3.5% down. With FHA, there are no restrictions on gifts (so all of the down payment money can be a gift), but your mortgage loan officer can advise you of the specific steps (as others have said, you need to show it's a gift to avoid people having money moved in to their account by a relative that isn't really theirs and then having to pay it back). The mortgage lender will look at your bank statements and will question any unusual deposits, so you can't just temporarily put money in there if it's not a gift you can keep.

For closing costs, it's 3% to 6% of the mortgage loan amount, and for FHA loans, the costs tend to be on the higher end. You can roll your closing costs into your mortgage, up to 6%, but the only way to do that is a seller's concession. So if you are approved for $300K and the seller agrees to take $285K for the house, and then you want to roll $15K in for closing costs. The purchase price becomes $300K, house must appraise for $300K, down payment is based on $300K, but seller knows they are only getting $285K.

If you can get the minimum down payment somehow, I think you are much better off buying now, with minimum down and rolling closing costs in, than saving for a bigger down payment and then dealing with higher rates, which will cut into what you can afford.

FM me if you need any recommendations on mortgage lenders or have further questions about the buying process. I work with a lot of first-time buyers, and I am always happy to consult or just answer questions!