Buying your first home can be an exciting experience, but it can also be extremely stressful, especially if your mortgage company doesn’t keep you informed or help you through the buying process. While the current real estate market in Baltimore offers great opportunities for first-time homebuyers (with FHA loans, tax credits, down payment and closing cost assistance, and low interest rates), the many options associated with with these opportunities they can do first: time mortgages a confusing subject. Even as you take the first step of considering buying a home, we want to keep you informed, making sure the mortgage process runs smoothly from start to finish. Some of the most important things to know up front are common misconceptions about buying a home for the first time.
Misconception #1: I can’t afford a house.
Income is certainly one of the factors that determines loan approval; however, that factor is primarily examined to determine that the first-time homeowner will be able to make the loan payments each month. In other words, Maryland mortgage companies are not concerned with whether a borrower is in the highest income bracket, but rather with whether that borrower is trying to live within their means. If you’re “house hunting,” for example, shopping for houses within a realistic budget should increase your chances of getting approved for a loan. Keep in mind that he can generally deduct the interest and property taxes he pays on his home from his income taxes each April. In fact, the amount saved on taxes by owning a home often makes up some, if not all, of the difference in the cost of buying over renting. Buying is better than renting in terms of establishing equity, too: When he becomes a homeowner, he generally builds equity, which means his home’s value increases over time. The rent, on the other hand, only benefits the owner.
In light of the recent extension of first-time homebuyer credit, there is even more incentive to buy a home. Under the law, “an eligible taxpayer must purchase, or enter into a binding contract to purchase, a principal residence on or before April 30, 2010, and close on the home by June 30, 2010” (according to the IRS website) . Those who are eligible for the credit and bought homes in 2010 can choose to claim the credit on their 2009 or 2010 tax return. For more information about the tax credit of up to $8,000 or ten percent of the purchase price, feel free in communicating with us. We’ll explain how you can apply a portion of your tax credit toward closing costs.
Misconception #2: I can’t buy a house because I don’t have a large down payment:
Perhaps because large down payments were required for loan approval in the past, this misconception is often the most common. If you’re considering a first home mortgage, you may be eligible for an FHA (Federal Housing Administration) loan, the choice of many first-time homebuyers because it typically requires only a 3.5% minimum down payment. Under recently announced FHA policy changes, FHA loan applicants must have a minimum FICO score (a specific type of credit score) of 580 to qualify for the 3.5% down payment. At our Baltimore mortgage company, however, there are many first mortgage loan options, and we’d be happy to walk you through those options if you’d like more information.
Misconception #3: My credit isn’t good enough to get a first home mortgage.
Even potential buyers with the worst credit situations have to start somewhere, although first-time buyers with better credit scores will generally have more options, lower interest rates, and lower down payments. If you’re considering applying for a loan and are concerned about your credit score, don’t hesitate to contact us with questions about your particular situation. We’ll be happy to help you find the best loan option for you or, if necessary, set up a plan to repair your credit and achieve your goal of buying a home.
For help achieving your best possible credit score, evaluating which loan options are best for you, and getting free answers to your most pressing first-time mortgage questions in Baltimore, Maryland, contact us online or by phone at 410- 882-6633. We’ll keep you informed every step of the way as you move toward purchasing your first home in Maryland!
