I got a call from the listing agent on XXXX told him you were holding off on purchasing for awhile and that your sister suggested an offer of $75,000 with seller paying your closing costs ($3,000). He said he thought the seller would accept that offer.
Since the Federal Reserve raised the prime lending rate we are expecting loan interest rates to increase. FHA rates today are 3.75%.
If we combine an FHA loan and the City of Huntsville Housing Authority Down Payment Assistance Program your total monthly payment would be around $458.
There are no monthly payments on the down payment assistance program and you never have to repay the down payment loan as long as you live in the house for 5 years or more.
You would only need to come up with around $450 for the FHA appraisal. This would be paid back to you at closing.
If you pay $600 per month in rent you would save $1,700 per year over paying rent.
You would save about $930 in federal taxes the first year.
You would same about 165 in state taxes the first year.
The total savings the first year over paying rent will be around $2,800. Your total monthly payments would be around $458. There will be no down payment and the $450 for the appraisal will be refunded to you at closing. I do recommend a professional home inspection ($300 - $500)
If the house increases in value 3% a year* in five years years it would be worth around $96,000. That's a $21,000 increase.
With no down payment or closing costs you would build around $21,000 in wealth while saving $2,800 per year over renting.
Forward this email to your sister to get her thoughts.