We just got approved for a $120k mortgage in Phoenix, AZ. We were expecting a ‘no’ so now that we have a ‘yes’ we’re not sure where to turn next. We want to know more about any grants or tax incentives, but every government web site we’ve found has broken links to this info. We’re interested in ‘green’ homes or making eco-friendly improvements and are curious to know if there are grants/incentives for that too. We’re also having trouble finding a good real estate agent, so far the only one to actually respond to our questions (experience, credentials) has been one who just got their license in January and they only work part-time so we’re guessing they are rather inexperienced. We think we need someone with more experience as we want to try and get the seller to pay closing costs and such. There’s so much to know and we just don’t know it, and we don’t want to make a costly mistake. We also don’t know how much time to expect it to take to buy and close on a house – our lease is up in August, are we looking too early? Also one of us will be in the UK for all of May and June. Please give us your personal recommendations/tips, and if you know good web sites or books that’ll help too! Thanks!!!
Asked by:pissy.missy
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Grants – Do not exist
Tax Incentives – All of the Federal Tax credits for home purchasing have expired.
All the special incentives for first time home buyers is great, but I would 100% recommend you still put down 20%. It will help you out so much every month when the mortgage payment is due. Also, get a 30 year fixed rate loan and nothing else, then if you can pay at least a couple hundred every month for your mortgage. This is honestly the best advice you are going to get. For example, if you pay off a 160,000 mortgage from a 30 year fixed rate you will save over 100,000 dollars in interest. Plus it allows you to fall back on a lower payment when times are tough. However, it will only cost you about $460 dollars more a year over 15 years instead of the 15 year loan. It is a good safety net that will only cost you an additional 7 grand.
The two books that I enjoyed were “The Everything First-Time Home Buyers” book and the “Dummies Guide to First-Time Home Buying.” Both were interesting, educating, and relatively easy to understand. This was several years ago and I know there are tons of new books available. You might search on Amazon and read some reviews to help guide you towards some great books that you could either purchase or check out from a local library.
Pay attention to location, this is truly important for resale down the road and you cannot change your location. Put down 20% if possible, you’ll avoid paying pmi and you’ll have some equity in the home. Think of your needs over the next 5-7 years because you typically need to stay in a home for this long to break even. If you’re planning on having children in the next 7 years, think about the school district, number of bedrooms and bathrooms, yard size, etc. Obviously, you cannot predict the future, but you don’t want to purchase a 2 bedroom and then get pregnant with triplets in the next two years. Keep your monthly payments reasonable (no more than 25%-30% of your monthly income). This is especially important if one of you might choose to stay home with children in the future – again, think about the future needs as well. Look for a buyers’ agent if possible when searching for a realtor. A lot of realtors have had to go part-time due to the recent housing market, and this can be difficult if they’re working a full-time day job (they can be difficult to get ahold of). Ask friends who have purchased for recommendations, I would also ask co-workers and family members if they have purchased in the last few years for their recommendations. Always get an inspection — this can save you thousands of dollars. An inspection is ALWAYS worth the money.
Currently all tax incentives have expired. Any grants will be local programs, and a local lender or realtor should be able to advise you in this area. You might also check your state and county websites to see if they mention anything regarding first-time home buyers.
Once you are under contract for a house, it typically takes 30-45 days to close (the closing will be stipulated in the contract). It’s not a big deal to ask with seller assist for closing costs; it’s really pretty common. It’s not too early to look because it can take months to find the perfect home (some people look for a year). Make sure that you make a list of your needs vs. wants. You might need a 3bdrm, but you might want a 4bdrm. Discuss which items are deal breakers (i.e. if the large kitchen isn’t updated, is it a deal breaker? Do you have to have a walk-in closet, or is a double closet suitable?). The more you narrow down your actual needs, the more it will help the realtor to find suitable houses to show you. Looking at homes will help you decide what’s most important to you as well. Be sure to pay attention to the items that are more difficult to change (i.e. layout, number of rooms, etc.). Also make note on the location of outlets and the number of outlets… you might find a pretty good house and then notice there’s only one or two outlets in the kitchen and/or living rooms and that they’re oddly placed. Try to visualize where you would place furniture and see if the “flow” of the home is good. Good luck to you!