Wanting to move to Phoenix area eventually, but working in another state. (real estate, rent)

[skorch101]

Greetings!

I am new to this forum and just wanted to say how informative it has been just skimming through some of the threads. It really helps gain perspective on a variety of things.

Here's my first question to this forum audience...

My wife and I currently don't live in AZ. My wife is deployed with the US Army and won't be back until January 2012. I currently work full-time, but not in AZ. We are in the process of saving enough cash to put a healthy (at least 50%) downpayment on a home. Though I don't forsee the housing market rebounding anytime soon, I also don't want to miss out on some great opportunities. What would our options be for our current scenario. We plan to move to the PHX area eventually, but it may not be for about 1 year. What if we found a home we really liked when we were in town, oh say, in September? What options/if any would we have to purchase putting a decent amount of cash down?

I'm not familiar with the laws and how that all works, so if anyone could shed some light on this topic, I'd be appreciative.

Thanks in advance for any responses.

[need_some_sun]

Well, you could purchase the home as a second home if you are still working where you are. You would need to qualify with your current payment and the new one.

[skorch101]

We don't own a home currently - we are renting.

[need_some_sun]

Unless you are working where you are buying or have a flexible job you can prove you can work from AZ you will still need to qualify with your current rent payment and the home. Or if you can show you live rent free.

[Captain Bill]

You can choose the amount of down payment to fit your monthly payment requirements.

For an FHA loan you can put down as low as around 3%.

If you use a Conventional loan and put down 20%, then you don't have to pay for Mortgage Insurance for the lender.

Other than that it's really up to you.

You may also consider discussing with your lender the benefits of buying on a VA loan since your wife is military.

[need_some_sun]

If you qualify on your wife's military income alone, you could buy anytime. VA financing does go to 100% financing. FHA is 3.5%. Conventional is 95% with MI.80% is no MI. There are always up front MI options over 80% with no monthly.

[skorch101]

Thanks Captain Bill and Need some sun - We would like to purchase a home in the $150-200k range and by the looks of it, homes are plentiful in that range. We would certainly feel comfortable putting down $50-75k as a downpayment. We are in a good spot as one of the benefits my wife has is a tax free salary right now overseas. We are banking 95% of her earnings and have very low rent currently. I guess my question should shift from can we by a home living in another state to can we obtain a great interest rate purchasing a home in a state we don't currently work/reside in. It technically wouldn't be a second home because we do not own a home currently.

[need_some_sun]

A primary residence is considered where you currently live 51% of the time or where you plan to reside 51% of the time within 30 days.

[Captain Bill]

The legal definition of primary residence is not spelled out specifically according to the tax laws.

Here's an article that discuss it.

Realty Times - What's Your Principal Residence? Tax Experts Not Always Certain

It appears to me to be what the intention of the homeowner.

The IRS gives the following illustration:

"if the taxpayer purchases his new residence before he sells his old residence, the fact that he temporarily rents out the new residence during the period before he vacates the old residence may not, in light of all of the facts and circumstances of the case, prevent the new residence from being considered as property used by the taxpayer as his principal residence."

Since it is a legal question, since you would have to declare whether the home is a primary residence, then it would be advisable to get an opinion from a real estate or tax attorney. Better to spend a couple hundred dollars to get the right answer and be safe.

The interest rates are good now, and if the lender were to determine it to be not a primary residence, it would add possibly a point, but is still low.

There are other factors to consider also.

[need_some_sun]

I was just quoting mortgage guidelines and definition of a primary residence. I am a mortgage processor.