Purchasing a home is a big deal. You have to choose the neighborhood, figure out what’s negotiable and what’s not, and decide how to pay for it. There are a lot of decisions to make. Here’s what you need to know about buying a Baltimore house in 2019:
KNOW WHAT YOU CAN AFFORD
This is the most important question anyone house-hunting can ask before seriously beginning to look: How much house can you actually afford?
The total cost of a home is never just the price on the listing. There are fees and closing costs, interest rates, repairs, property taxes, utilities, and much more. So what looks like a $2,000 per month mortgage can easily, when everything’s added in, balloon into more than $3,000 per month spent on average.
If your budget isn’t prepared for that spend, you may quickly run into financial trouble.
Take a deep look at your budget and decide just how much you can reasonably afford each month toward housing and all the associated costs. Use this number when looking at mortgage rates and narrowing down your house hunt.
Going into a house showing without being pre-qualified for a loan can waste your time and the real estate agent’s time at best, and lead to a major disappointment at worst.
If you don’t have some paperwork in hand saying how big a mortgage your lender has approved you for, you could easily be looking at homes way out of your price range. This delays the completion of your home search and eats up the time of any agent showing you a house.
And if you end up finding your dream home, with its ideal neighborhood, open floor plan, and eat-in kitchen only to discover down the line that it is way out of your price range, your entire house-hunting experience can be soured.
Rather than going in blind, get the mortgage pre-qualification process rolling as soon as you’ve decided on your ideal monthly housing spend. It often only takes a couple of days, at most, to receive notice that you’re pre-qualified for mortgages up to a certain dollar amount.
PLAN FOR RISING INTEREST RATES
Another important thing to know about buying is that interest rates on home loans have been increasing after sitting at historic lows for several years. This is a sign that there’s more confidence in the home market, which is good, but it can be a headache for home buyers.
If you’re just thinking about beginning the process of buying a home, plan some extra wiggle room into your monthly budget to cover any rises in interest rates between now and when you do end up buying. Also, carefully consider what type of mortgage you want to lock yourself into.
While adjustable-rate mortgages were seen as desirable for some time due to the ability to pay lower interest rates while the balance of the loan is higher, increasing interest rates may make these less attractive to many people.
If keeping a consistent, predictable monthly payment is important to you, consider going with a fixed-rate mortgage to lock in today’s interest rates should those rates continue their upward trend.
KNOW YOUR CREDIT SCORE
There’s some debate about exactly what credit score you “need” to be able to get a mortgage. Understanding yours is a vital thing to know about buying a home in 2019.
If your credit score is over 700 or so, you’re likely to have little trouble getting approved for a mortgage that’s within your price range. But what happens if you’ve got a lower credit score?
The minimum credit score most lenders will consider is 620, though some may go as low as 580. If your score is below that range, consider delaying your home purchase some as you work toward improving your credit score and your chances of getting approved.