First Time Buyer Dilema

**Smoody** · 02-03-2009, 05:23 PM

My wife and I are first time homebuyers. We live in las vegas, Nv and have two children. Our gross income for 08 was appx. 50k. We have appx 5k saved for down payment. Our credit scores are 762 and 734. My wife has a steady job in vegas for over two years and Im self-Employed for over 7 years. We currently pay $1150 in rent per month.

The dilema

We are eligable for up to $10,000 down payment/closing cost assistance throgh the city's first time hombuyer program. We met with a mortgage loan officer and was told we could get into a 180,000 home at 5.375% with 3.5% down 30 yr fixed FHA with a cash to close total of 6,850. All of this would be paid through the assistance program.

but...... Just last night a dear family member offered to gift me 25k as long as i used it towards the house. Otherwise the gift would be in the form of an inheritance received upon the passing of said 80 year old relative.

I am unsure how to proceed. Should I take advatage of the free money from the city and then refinance at a later date with the 25k? Should I put my 5k and the 25k gift towards a down payment?

What would you do in my situation?

Your input is greatly appreciated

**AugustaREGroup** · 02-03-2009, 08:23 PM

You can just make a 25K payment towards your house and then refi when you need 2. That way your 25K is growing at 5 percent interest (whatever your bank rate is) guaranteed (minus tax benefits).

Take advantage of the city deal

**SoCalBuyer** · 02-03-2009, 10:48 PM

@Smoody,

I would take advantage of the city assistance program. 25k could be used to make extra payments towards principal throughout the year. That way you can pace things according to your requirements.

Your loan offer sounds really good to me. I am in the process myself, and the FHA rate and closing costs quoted to me for a similar amount were much higher. If you dont mind, can you tell who the lender is?
Good luck.

**Adam Duckwall** · 02-04-2009, 07:54 AM

I agree with the other posters. Your loan offer sounds pretty good, and I think you should take advantage of the down payment assistance. I am a Realtor and not a loan officer, but if it were me, I would make sure that there is not a way to incorporate the gift funds for principle downpayment in the original loan structure and still take advantage of the down payment assistance from the city. Perhaps you have already tried this. It would be nice to have a lower monthly mortgage amount, but if this statagy is not possible, you can always pay the principle after the loan has closed which will just shorten the term of you loan significantly and save you a lot of money in future interst paid. Good luck

**Smoody** · 02-04-2009, 09:06 AM

Thank you all for your feedback

The loan terms qouted in the OP were in the form of a good faith estimate from METLIFE

My thinking was that I could save money in the long run by putting the 30k down since I would not have to pay PMI and could shave .125 a point off the interest but I guess if I take the assistance and then apply the 30k to principal I will accomplish the same thing.

I got an estimate for putting down 30k and the terms were 5.25% conforming generic conventional 30 yr fixed with $540 in closing costs after sellers credit.