Buying a Home

Decide if you are ready to buy.

1. Do you plan to live in your new home for at least three to five years? Owning a home is a long term commitment, not a short term investment.
2. Financial preparation includes steady employment, a good credit score, cash for a down payment and/or closing costs, plus reserves. These are basic requirements to obtain a mortgage and provide a cushion to help with repairs and maintenance.
3. Do research and check your budget.
4. Know your credit history. Get a copy of your credit report (see “Financial and Credit Education” for information about the three primary credit reporting agencies). Check for any errors in your credit history six to twelve months before you apply for a loan. It takes time to make corrections to any errors you spot.
5. Get your credit score on-line for a small fee. Take your score with you and ask lenders for loan product and payment terms —not just the interest rate!  Do not let multiple lenders pull your credit score for interest rate quotes because repeated requests can sometimes adversely affect your score
6. Determine your price range. Guideline: your total housing expense (mortgage principal, interest, taxes, insurance and other fees) should not exceed 28-30 % of your gross income. Save enough cash to make a minimum down payment, as well as all or a portion of the closing costs.
7. Compile a home wish list. How many bedrooms or bathrooms do you need? Is a particular school district important? Do you want access to public transportation? Do you need a large yard? Be clear with your real estate agent about your priorities for your perfect home.

Get lender pre-approval.

1. A pre-approved letter tells a seller that you are ready and able to commit and are eligible for financing for a home in a particular price range.
2. Pre-approval does not necessarily lock you into an interest rate. Unless otherwise stated, the interest rate that the lender quotes may fluctuate with the market between the time you first meet with the lender and the time you have an executed contract.
3. The lender will alert you if there is a requirement for homebuyer education classes for specific loan programs, so that you can complete it before you submit an offer.

Select your professional advisor.

Are you planning on working with a Buyer’s Agent? The Maryland Real Estate Commission has an excellent guide to working with qualified real estate professionals.