Why buy?
It's a great time to buy a house in Maryland provided you have the financial means to qualify for a loan and can provide a lender with reasonable assurance of repayment. Sellers are motivated to price their homes to sell quickly. Interest rates are attractively low. Unemployment rates in Maryland remain low. Real estate remains a stable long-term investment. Not sure about buying? Check out this calculator to evaluate renting versus buying: http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?Section=YPTH
What are the 3 most important steps to do before I buy a home?
In today's market, the best steps that you can take to prepare for buying a home are:
- Improve your credit score;
- Increase your household savings/reserves;
- Be prepared to make a minimum cash downpayment of 3 % - 5% of the sales price.
What is a "first time" homebuyer?
To be eligible for financing programs targeted for first-time homebuyers, most lenders in Maryland follow the definition accepted by the U.S. Department of Housing and Urban Development (HUD) which defines a "first time homebuyer" as an individual who has not had an ownership interest in a principal residence (anywhere) for the previous three (3) years. Individuals who are separated or divorced and had an interest in real property during the previous 3 years may be eligible, if they can document that they did not live in the property during the immediate past 3 years. In addition, they must no longer have title to that joint property or will divest themselves of title to the property prior to closing.
First-time buyers in Maryland who have never owned property in Maryland as a principal residence are entitled to a one-time waiver of the state's portion of transfer taxes at settlement.
What is a "buyer's agent"?
A "buyer's agent" is your best resource when purchasing a home because that licensed agent is committed to focusing on your interests throughout the homebuying process. A "buyer's agent" is a real estate agent who assists the buyer in locating properties, evaluating them, preparing offers and negotiating the terms of an offer solely on the Buyer's behalf. After the Seller accepts the offer to purchase, the Buyer's Agent continues to facilitate the transaction for the Buyer through settlement. In the State of Maryland, the commission for the Buyer's Agent is typically paid at closing by the Seller. A written agreement between a Buyer and a real estate agent is required to establish the relationship with a Buyer's Agent.
What is the difference between downpayment and closing costs?
Both closing costs and a downpayment are costs that are collected from a Buyer when purchasing a home. In Maryland, closing costs can be as high as 4% of the sales price and include the total costs and fees associated with closing a loan, including property taxes, state and county fees, lender fees, and the first year's hazard insurance premium. Although closing costs can be prohibitive, especially for first-time homebuyers, a Seller can choose to contribute money to pay some or all of the Buyer's closing costs at settlement (depending upon the terms of the mortgage lender).
A downpayment is a portion of the purchase price that is paid in cash, to cover the difference between the purchase price and the mortgage loan amount. It is an assurance to the lender that the borrower is willing to make an equity commitment (investment) to the proprety. In today's market, a typical downpayment is between 5% and 20% of the sales price, but can be as little as 3% for an FHA loan.
What is APR and why is it different than the interest rate on my mortgage loan?
APR means Annual Percentage Rate and it is the number that informs the consumer of the total costs of the loan, expressed as a yearly percentage rate. APR takes the total cost of credit into account (including the interest rate PLUS all of the lender fees that are financed over the term of the loan). It can never be lower, and is almost always higher than the stated or advertised interest rate on the mortgage loan. Within reason, the APR is a tool that allows you to compare different types of mortgages based on their total cost.