5 Things You Must Absolutely Know and Do Before Buying a Home

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

1. Are you able to stay in one place for an extended period of time? When you are thinking about buying a home, you should consider your ability to stay in and commit to an area. If you are the type that moves around a lot due to your job or because you like to change up the scenery, buying a home may not be right for you.

2. Know our credit score and reconcile any blemishes on it before pursuing a mortgage. Your income and credit are the largest factors a lender takes into consideration when deciding to offer you a mortgage and how much to lend to you. It is up to you to be completely aware of your credit history and score so that you can start the process confident and knowledgeable about where you are headed in the future. Lenders look at four things when considering your mortgage application: the “four C’s of credit”. Capital, Capacity, Credit History and Collateral. Capital is the amount of money you have to put forth for the down payment and closing costs, as well as how much you have saved to pay for unexpected expenses. Capacity is your ability to pay your monthly mortgage payments on time, along with all of the other bills you are responsible for. Credit History refers to how much money you owe to others, how often you use credit, and if you pay your bills on time. Lastly, your Collateral is the house itself; it provides security for the loan. Being aware of your "four C’s" will put you far ahead of the game, and empower you to take charge of your future.

3. Know what you can afford! The current housing crisis reminds us of the importance of knowing how much of a house you can afford. Obtaining a mortgage you can afford is not about finding the home of your dreams and figuring out ways to qualify for the loan, but rather, it is about understanding what you can afford and pursuing a home that is within your price range. If you have good credit, a steady income and do not owe a lot of money, a good rule of thumb is to look for a home that is no more than 2 ½ to 3 times the amount of your annual income. Any more than that and you could find yourself in trouble in the future. Get pre-approved. This way, you’ll know what you are working with right from the start.

4. Seek professional help and advice. As a first-time homebuyer, it is easy to become overwhelmed with information and to feel rushed through the process. You want to make sure you get the best mortgage rates possible, with terms and conditions you can handle so you can be a successful homeowner. Therefore, NHS of Baltimore suggests that you seek step-by-step help from a professional who knows the lending market and can advise you on the best decisions to make. There are dozens of nonprofits in the Baltimore area that offer free counseling and advise (including us), and they always have your best interest in mind. Don’t pay for this advise when you can get it for free!

5. Hire your own professional home inspector and do your homework! Although the bank will require a professional appraisal of the house anyway, you should take it upon yourself to go a step further. Hire a professional who has experience in doing home surveys. They should be able to let you know of any problems that exist with the house before you buy it. If something significant is found through his/her inspection, you can use this to leverage the price down, or you may decide not to buy the home altogether. Either way, know what you are buying. You have to live there for a long time.

Once you have shored these 5 things, you will be well on your way to becoming a successful homeowner.