Buying Real Estate

Looking to buy a property? You've come to the right place. Buying a home is a large investment that shouldn't be taken lightly, and with over 30 years of combined real estate experience under our belts, we can help you avoid common buyer pitfalls. So how do you find the home that's right for you? The first step is to schedule an appointment with one of our agents to discuss your options and help you get closer to finding your dream home. In the meantime, check out the rest of our buyer's guide to purchasing a home.

Buying Your First Home?

First time buying a home? Congratulations! You've probably been renting for a while, and now you're going to take the first step into homeownership. So, what are the advantages of buying over renting, and what benefits can you gain as a first-time homebuyer?

Advantages of Owning a Home

The main problem with renting is that every month, you give a check to your landlord, and that check is gone, forever. You'll never get that money back, whether you live in the house for a few months or a decade. With home owning however, although you do pay a monthly mortgage, this payment is put towards equity in your home, which can e resold at any time, allowing you to earn back a lot of your money (or even break a profit!). Additionally, not only will your credit score improve, often times your mortgage interest and property tax can be tax-deductible.

Furthermore, when you own a home, you don't have to deal with a landlord's strict rules or regulations or worry about losing your security deposit. You can drill as many holes in your wall as you want, any nobody will yell at you! The home is now yours to do whatever you want with! You can rearrange your furniture, repaint, and even knock out walls and rearrange the entire layout of the house! You can add extensions, grow a garden, install a hot tub, whatever you want. And if anything breaks, you don't have to wait weeks for your landlord to finally come around and "fix" it. Sounds great, huh?

First-time Home Buying Advantages

If this is your first time buying a home, you can get some special advantages over other homebuyers. In the state of Maryland, a buyer will pay a "State Transfer Tax" of 0.5% of their new home price to the state, but as a first-time buyer, you're excluded! That means if you purchase a $400,000 home, you save $2,000 that you'd normally have to pay to the state.

How Much Should Your Down Payment Be?

The down payment on your home can be the largest transaction you make in your entire lifetime. It can present itself as a daunting challenge, especially if you don't have a large sum of cash sitting tidily in your bank account.

Luckily, certain lenders acknowledge this, and they will allow you to place a smaller down payment (3-5%) in exchange for a higher interest on your mortgage. If, however, your down payment is higher (20-30%), lenders will not only grant you a lower interest rate, they may also approve your loan even if you have a lower income or credit score.

Can a Down Payment Be Too High?

Certainly. Some people might say no, that a larger down payment is always better. But keep in mind that if your down payment is too high (especially if it's due to an excessively high home price), it could really put a strain on your income and financial status. A safe down payment is anywhere from 5% to 20%.

What Can I Afford?

A lender's rule of thumb is that your monthly mortgage payment will not exceed 28% of your gross monthly income. Lender's also pay close attention to your debt ratio, which is the percentage of your gross monthly income that you spend on monthly obligations, such as mortgage/housing, credit card fees, car payments, student loans, child support, etc. This ratio does not include things such as food, personal purchases, or your phone bill.

Your total debt ratio should be lower than 36% to ensure you're qualified for a home loan (and to ensure that your monthly savings can cover a down payment). Supposing your monthly income is $5,000, your mortgage payment should not exceed $1400. Additionally, your total other monthly obligations should be around $400 to ensure a good financial safety net.

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