Like most Americans, you’ll need to work with a mortgage lender to get the financing for your new home. Choosing a lender, figuring out interest rates, and the process of buying a home can be overwhelming, but with the right Southern Maryland real estate agent by your side and the right information in hand, you don’t need to worry about the process. Think about these five things when purchasing a Southern Maryland home to make sure you find the lowest rates and the right lender for your mortgage needs.
How much does it cost?
The first phase of buying a Southern Maryland home is to understand the true cost of home ownership. Your costs will fall into four categories: Principal, interest rates, taxes, and insurance. Your mortgage includes the principal and interest rates; the principal pays down the overall balance due on your home loan, and the interest will pay borrower fees. You’ll find an amortization calculator handy when you’re calculating ownership costs.
Property taxes are valued at 1.2 percent of the home’s total value annually. Homeowner’s insurance is also typically required if you have a mortgage. The price of insurance ranges from $700 to $1,200 depending on the home’s value and the level of coverage you choose. For planned unit developments (PUDs) or condos, you may also have to pau PITI insurance requirements, too. In addition, you may have to pay homeowner association costs that cover upkeep and maintenance and general building or development amenities. The costs can range from $100 to $1,000 annually.
Know your history
Your credit history will play a big role when lenders are determining your interest rates. Lenders are looking for people who have a strong credit history, pay their bills on time, and have a high credit score, so it’s important that you do your own research and know your credit score before applying. If you have a strong credit history, great! If not, consider applying for a few lines of credit. This will drop your score a few points, but after a few months of consistent, on-time payments, your score will go backup.
By law, you can get a free credit report each year. Be sure to get your report and review it, looking for ways to increase your score. Then, you can decide when the right time to apply for a mortgage is.
What is your budget and timeline?
Since you already know your monthly incomes, expenses, and general costs, you can start to budget for the amount you can set aside for a mortgage each month. To choose the right loan, however, consider how long you plan to live in your new Southern Maryland home. With a 30-year, fixed-mortgage loan, you don’t expect your income to grow or your circumstances to change much. If this is the case for you, you can plan accordingly for the long run.
If you don’t have the 20 percent to put down on a home, FHA, Fannie Mae, and VA loans can be great options. For as little as 3 percent down, you can buy a home. Plus, you will still have monthly mortgage and PITI rates to calculate. Use an online mortgage calculator to get an idea of what your monthly costs will be.
Get advance approval
Get preapproved for a loan, and you can almost certainly guarantee approval from a lender. But if you do all the research and aren’t preapproved before applying for a loan, you could be disappointed when you’re denied by a lender. Most lenders will require that you show you’re preapproved before they’ll even consider lending you money. In a competitive market, a preapproval letter may be needed before you can obtain financing.
Know what you need
Not all lenders have the same requirements. Before applying, make sure you know each lender’s requirements for approval. At the very least, you’ll need to provide your full name and address, the number of children or dependents you have, your social security number, income, bank statements, divorce records, and other documents.
When you apply, the lender will give you a checklist of all of the documents you will need. Follow the list and provide all the records to ensure approval and to make sure there are no delays in the process. If a lender asks for just two pay stubs, don’t send more or less. This can result in denial or it may slow down the entire process. Only provide the information that is requested of you, and make sure all the documents you provide are accurate and up to date.
Time spending researching the process of home ownership can help you be ready for the application process. You’ll know what you need and how the application process works.
Hughesville MD Homes for Sale and Real Estate Services in Southern Maryland. You now have a search engine to help you with your Southern Maryland home search! And I’m ready to provide you with a custom home valuation if you’re considering selling your home. Let’s connect to discuss how I can help you. Contact Kimberly Bean at 301-440-1309
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