Deciding you’re ready to buy your first home can be an exhilarating experience. The prospect of getting to have a place you can call yours is a one-of-a-kind feeling. It also comes with the stresses of the homebuying process, from finding the right place to securing the perfect loan. Getting a Maryland home mortgage is just one step in the multi-faceted process. Here are our recommendations for steps you should take as a first-time buyer that will help you shop successfully.
Step 1: Review Your Financials and Savings
The first, and most obvious step, is to review your financial health to ensure that you can afford a home in the first place. First, ascertain the health of your credit. Don’t forget that by law, you are entitled to a free annual report from each of the large credit reporting firms, Experian, TransUnion, and Equifax. Go here to learn more. Next, you want to tally your debt-to-income ratio (DTI). This is an important factor that will be utilized by lenders to determine what kind of Maryland home mortgage you will be afforded. To get this number, add up monthly debt expenses, such as car loans and credit card expenses, and divide that total by your total monthly income. The number you’re left with is your DTI, which will be formatted as a percent.
Reviewing the state of your financials is important, but so is saving. Unless you qualify for specialized loans, like an FHA or VA loan, you can expect to pay at least 20% of the home’s value down. While there may be down payment assistance programs available based on location, it is still important to prepare for the costs a down payment will incur.
Step 2: Get Pre-Approval
Once you’ve prepared yourself financially (and mentally as well), you may feel ready to dive in to house hunting. However, there is another crucial step you should take prior to that will arm you with the right information to shop smart. That is seeking pre-approval. Pre-approval allows lenders to help review your financials and give you an informed idea of what kind of loan you’ll be able to afford before you’ve actually obtained one. The advantage of pre-approval is that you won’t be shopping in the dark. You can see the price-tag on a home and know right away whether it’s within your budget or not. Getting pre-approval will require you to submit a variety of materials to your mortgage broker or lender, including your W-2s, tax returns, a snap-shot of yout debt-to-income ratio, and any number of other financial materials. We reccomend every prospective buyer seeks out pre-approval to help streamline their shopping process.
Step 3: Choose the MD Home Mortgage That’s Right for You
Once you’ve gotten pre-approval, you can move forward with solidifying which loan works best for your scenario. For many first-time buyers, a 30-year fixed-rate mortgage is usually the go to. This loan allows you to balance a reasonable interest rate with a long term to keep your monthly payments manageable. However, there are a variety of loan options on offer, with several only accessible to you depending on certain standings, such as your income level or veteran status. Working with a qualified mortgage broker will help you identify the best mortgage options available to you.
Step 4: Find the Right Realtor and Right Home
Realtors are a great resource, especially for first time home buyers. They work hard to help you through the buying process. Not only to help you find the perfect house, but with the steps that come next, such as the inspection and appraisal. Finding the right realtor can help alleviate much of the stress that comes with the home buying process. Once you’ve found the person you feel is right for the job, they can help you find the perfect house to build your future in.
Step 5: Finishing Up
Finding the right house starts a secondary process in of itself. Negotiating your offer, having the home inspected, having it appraised, a final walk through, and of course, closing. With a qualified realtor and mortgage team at your back, you’ll have the assistance you need to understand the importance of each of these steps. You can breathe easy knowing you’ve secured a great rate for an incredible home, especially if you’ve been working with the expert team at Federal Hill Mortgage. Our team has been helping provide prospective buyers with a great Maryland home mortgage for over two decades. We’re the number 1 ranked loan originators on the East Coast, and can’t wait to help provide you with the mortgage services you need. If you’re ready to get started, apply now to get started on your mortgage journey.