The big news is that I found a house. I really like. It's spacious (3 bedrooms), nice (completely rehabbed, finished basement, it's not even quite done yet), inexpensive (at the lower end of my price range), and has a lot of cool little perks (slant roof, picket fence, walkout patio, private fence around backyard). It's an end house on a block in Bel-Air/Edison, and it's not on the market yet. They're kind of holding it for me; the organization wants teachers in their houses.
Now, it's deciding on a mortgage. I'm doing this all alone, which is daunting, so I'm going to kind of write it all out for the world to see. If you decide to comment, just know that there are some things I can't change. Even though I have been planning on buying for years, I wasn't expecting to have to buy in 60 days or so. As such, my savings are not what I would ideally want (10% down). And there is nothing I can do about that at this point. Still, this is the right time to buy for me. Not only has the $9,000 incentive for new home buyers been passed into law (and only until July), but I simply don't want to rent again and don't even think I could find a place for a month or two when I have a 75-pound dog. So, the time to buy is now. Plus, I've been putting it off for years.
With that all in mind, I have three options in front of me, and have been pre-approved for all these options. I just can't decide what's best for me right now:
1) Go through MECU with a conventional mortgage, which is what most of my teacher colleagues have done. The huge benefit from this, for us teachers, is it is the only one that allows for direct payment from paychecks over 10 months (since we don't, and can't, get paid in the summers). This would be especially important this year, because I'm going to be blowing all of my summer savings on a house. The interest rate is 5.0% right now, and requires 5% down. For me, this would be about $6250. The closing costs are on top of this. There is help available for some of them, and I think (and am going to try) to get the organization selling selling the house to me to weave their deal so they're helping me with them, but that would increase the amount I need to put down as well. The problem is, I only have around $4000 saved right now, and my $2300 tax refund (which was set to be direct-deposited by Tuesday) has been held up; I just found out today that I did not complete my 2004 taxes. I have no idea how it happened, but I did them on EasyTaxCut that year and they must not have sent. I just did them again tonight (the gov't owes me $28) and mailed them in, so hopefully the hold is lifted ASAP, and that gives me enough money, or close to it. This mortgage is the ideal mortgage for me if I can swing the downpayment, mostly for the 10-month thing, and I've considered borrowing off my 403-B (against the advice of Suze Orman) to make that downpayment. However, because it's a conventional mortgage, I don't think you're allowed to borrow off of retirement for that, but I'm not positive; the kind woman listed all these things that conventional loans do not allow (gifts from others was one), and I can't remember if that's one of them or not. The monthly cost for me for this mortgage is not different than the next one at all ($20 or something like that) between 5.0% and 5.5% rates, because my mediocre credit makes the PMI a much higher percentage with a conventional loan than with an FHA loan, where it is fixed.
2) Go through MECU and get an FHA loan for 5.5%. It would require 3.5% down and I 'd still be responsible for all closing costs, which, as you know, can be more than $10K. I need to figure out how much St. Ambrose is willing to pay. As aforementioned, the monthly cost difference is negiglible, but they can't take directly from my paycheck and there doesn't seem to be much help with closing costs available.
3) Go through First Mariner and get a CDA loan for 5.75% and 1 point. There are two state programs through CDA that match Baltimore City grant, plus another grant worth $2500 through the state and CDA, so that the overall grants and forgiveable loans are $11500 for closing costs. The interest rates are usually below market but the market rates are so good right now so they're not. This would require hardly any cost out of my pocket at all.
So, I need to figure that out over the weekend and then make an offer. I also need to figure out how much help with closing costs I'm going to get.
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