Although I already closed on my house in July, my best friend is in the process of buying her house located about 8 miles from mine. So I'm doing my best to tell her all the things I didn't know or understand when I got into the home buying process. I'm no mortgage or real estate expert so these things should serve as talking points for you and your realtor, seller, and mortgage lender.
- If you already filed your taxes for 2008 and buy a house in 2009, you can amend your 2008 tax return to get the $8000 tax credit sooner! I think we're using ours to build a new deck!
- If you have a debt to income ratio of greater than 41%, then you'll most likely need to get an FHA mortgage loan.
- MIP (Mortgage Insurance Premium) is required to be paid on FHA loans. This amount is equivalent to 1.5% of your loan amount that gets tacked on the the total (no, it makes no sense). Then you have to pay 0.5% (of loan amount over 12 months) in monthly mortgage insurance payments usually til you've paid for over 20% of your home.
- PMI (Private Mortgage Insurance) refers to mortgage insurance for conventional loans. You'll have to pay this if you put down less than 20% and it's usually less than MIP on FHA loans.
