55reasons

I am recently married and just switched jobs. My salary is $60K and my wife's is $75K. She is currently claiming 2 allowances and filling single. I need to adjust her W-4 and submit mine for my new job. We are buying our first home and estimate that next year we will have $28K in interest to itemize...

My questions are:

A) how many allowances should we claim on both our W-4 forms

B) should we claim married or married, but withhold at higher single rate?

I am pre-approved for a 100% financing or 5% down. I have the 5% down payment already saved and I'm wondering what makes more sense.

A) Taking a 100% financing mortgage (80/20 mortgage structure) and use the 5% I had saved to pay off our car loans (total of $420/month, both still have 2 1/2 years worth of payments on them) I would still have roughly 2% of my down payment in cash left after paying off the cars.

B) Put a down payment of 5% on our mortgage (with an 80/15/5 strutcture)

The monthly difference in our mortgage payment between the 100% scenario and the 5% down scenario would be $200. I would have an extra $420/month if my cars were paid off.

What makes the most sense? Is it worth paying off non tax-deductible debt and end up with a larger mortgage payment and the bigger tax deduction that would go along with that? Does does affect my chances of refinancing sooner rather than later if interest rates went down?