Is now the right time for me to buy a home?
Global economic conditions have driven the current housing market into a frenzy. It may be tempting to jump into the low-rate market. But you might want to consider whether you are making a wise investment or not. The fact is, mortgage rates are likely to stay relatively low for the foreseeable future, so don’t let them be the single determining factor in whether or not you purchase a home right now.
Trust your Baltimore bankers at Homewood Federal Savings Bank to be clear and up-front with you about mortgage lending. We have humans, not computers, making independent decisions about each loan. We service your loan until it is paid in full. We don’t sell any of our loans. Our goal is to be your trusted resource when it comes to making one of the biggest purchases of your life.
So, is purchasing a home in your near future? Let us help answer some of the basic questions.
Know your credit score
You can check your credit score for free once every 12 months from each of the three major nationwide credit bureaus: Equifax, Experian and TransUnion. In very general terms, you will get the best loan rates for a credit score of more than 700. People with credit scores below 600 will have a more difficult time securing a loan. Your local banker can also help you access and understand your credit score.
Get a pre-approval letter from your bank
Working with a banker before you begin the home buying process will help you know how much you can spend on a house. But more than that, local bankers know the local real estate market and can be a valuable asset in helping you understand the true costs of purchasing and owning a home. Securing a pre-approval letter allows you to move quickly with an offer in today’s lightning-fast home buying market.
What you can borrow versus what you should borrow
Just because you are approved to borrow $300,000 for a home, doesn’t necessarily mean that you should borrow that much. Your hometown banker will work with you to understand the costs associated with purchasing and owning a home. That includes ongoing maintenance, Homeowners Association dues and fees, taxes, insurance and initial purchase fees like closing costs and realtor commissions. Working with a local banker ensures they know you and your overall goals, so you don’t get weighed down with a mortgage that prevents you from achieving everything you’ve set out to do.
Mortgage insurance – what is it and do I need it
Mortgage insurance protects the lender, not you. If you purchase a home and have less than 20% of the purchase price in cash for a down payment, you will be required to pay mortgage insurance. It protects the lender if you fall behind on loan payments. It’s best to have the 20% down payment, but you don’t need to have it to qualify for a mortgage loan. Work with your banker to determine your options for down payments.
Do you think you will be in this house less than 5 years? If so, you may want to re-consider a home purchase. Five years is the average amount of time it takes to recoup the upfront costs of purchasing a home and to begin to build equity in your home as an investment. If you’re in the home less than 5 years, you likely will lose money on the purchase. However, working with a local banker can help you explore options like an ARM loan that may be right for you, if you think you may not be in the house for a long-time.
Local banks, making local, personal decisions are the best way to ensure your home helps you build the life you’ve dreamed of. Homewood Federal Savings Bank prides itself on its manual lending process and in-house loan servicing. We are truly your bank for life.