Buying a home is an exciting undertaking, especially for first-time home buyers. The purchase of a home often marks the beginning of a whole new chapter in their lives. But the process of buying that home also brings with it not a little nervousness and anxiety. Most people worry about whether they can qualify for and then get the mortgage they need to purchase the home. It doesn’t have to be so anxiety filled, though. Here’s how to guarantee that you’ll get a home mortgage in Baltimore.
Know What You Can Afford
The first and most essential step toward guaranteeing that you’ll get a home mortgage in Baltimore is simply to figure out what you can truly afford. Then, just shop in that price range. You can find many mortgage qualification calculators online to help you find your affordability range. The standard rule of thumb is that you should not spend more than 28% of your monthly income on monthly mortgage payments. Your agent can also assist you in this area. (To find out more, call 443-928-4550.)
Increase Your Income
Lenders will look long and hard at your qualifying income in determining whether you qualify for a mortgage. So to help guarantee that you’ll get a home mortgage in Baltimore, increase your income. And, no, that doesn’t necessarily mean getting a second job.
You may have more qualifying income right now than you realize. For example, the Equal Opportunity Act of 1976 made it possible for you to use income from public assistance programs to qualify for a mortgage if you are likely to continue receiving that income for at least three years. And there are other sources of income you can use that you may not have considered . . .
- Child support and/or alimony
- Capital gains income
- Long-term disability income
- Boarder income
- Foster care income
- Auto allowance
- Employment offers/contracts
- Interest and dividends
- Royalty payments
- Trust income
- Unemployment benefits
- VA benefits
Pay Down Debt
While you don’t have to have a zero balance on your credit cards, it does help to pay down debt as much as possible to help guarantee you’ll get a home mortgage in Baltimore. After your qualifying income, the next most important thing for lenders is your total debt. Lenders will look closely at the debt-to-income ratio to determine your mortgage qualifications. To satisfy your lender, your total monthly debt payments – and that includes the mortgage payment – should not be more than 36% of your monthly gross income.
You should also avoid taking on any new debt after applying for the mortgage. You can be sure your lender will go back over your credit with a fine-toothed comb before closing – and new debt can bring a halt to the whole thing. So, even if you need a new bedroom suit or a new refrigerator for that new house, put off these major purchases till after closing.
Get a Different Mortgage
If things still look bleak for you to get a home mortgage in Baltimore, the solution may just be to choose a different kind of mortgage – one that you’re likelier to qualify for. With respect to income, some mortgages have more lenient guidelines than others.
For example, one of the ways VA loans determine mortgage qualification is the “residual income” method, which is more generous than the standard debt-to-income ratio method. There is also the Freddie Mac Home Possible program to help lower income people get a home mortgage. If you have a history of paying bills on time, an FHA loan is another possibility.
Hire an Agent
And if you really want to guarantee that you’ll get a home mortgage in Baltimore, be sure to hire a good agent. An experienced, local real estate agent will have her finger on the pulse of the local market. She can help you find the home you want in your price range. (Remember the first tip about knowing what you can afford?) A good agent can also guide you successfully through all those other steps.