HELP! Need to decide on a mortgage...fast!

noonan2678 · Joined: 16 Jun 2008 Posts: 1

Thanks in advance...

My girlfriend and I are purchasing a home and I have come to a brick wall in deciding whether to go with FHA, traditional 30 yr. fixed, or a 40 yr. option. We are first time home buyers and do not have a lot of cash on hand as I have been paying my debt down (to 0!) over the last few years. We do have money that can be gifted...I know there are some limitations here. I need to find the best balance of keeping all up front costs to a minimum and not screwing ourselves in the future. We will be in the home for at least 5 years but more than likely for 10. Also, the way I figure our payments, our monthly expenses will be very tight, so a low payment at the expense of paying less principal would be ok if the difference were significant. Looking at the 40 paid in 30 option here...is this a good choice?

Other than the upfront costs, is there really any benefit to FHA in our situation?

Here are the details...

- House will sell for $390K (hopefully)

- Both have ~740 credit scores

- Combined 140K in earnings

- Need a fast closing

I know that I am all over the place, and I appreciate any help someone that has been through this can give.

Thanks so much!

liverichly · Joined: 10 Feb 2005 Posts: 198 Location: Orange County, CA

How much are you putting down, what is the county/state the property is in, and how much are your monthly debts (to help calculate your debt to income ratio with)?

Secondly, if your expenses are going to be "very tight" is now really the time to buy for you? Have you considered buying a less expensive home or reducing your other expenses before buying a home?