Are you tired of renting in Southern Maryland? A white picket fence with a little garden and a place to call home is a common dream for many of us.  It makes perfect sense—why pay for someone else’s mortgage when you could be investing that money into a home of your own.  Taking the jump into home buying is a big step. The first thing to do is determine if you are financially prepared to do it.  Here are a few things to consider before calling a Realtor:

What’s Your Credit Score?

Your credit score determines whether or not a bank will grant you a mortgage. Request your credit reports—you can often get them for free— and read through them.  Note anything inaccurate and issue a challenge them with the credit reporting agencies. Anything with an incorrect address or misspelled name can be challenged and removed. The higher your score the lower your available rate. If your credit score is lower than you would like there are some simple things you can do to improve it. Paying off small debts and having multiple tradelines that are in good standing will improve your score rapidly. It’s only a minor hassle and will be well worth the effort when it saves you money.

What’s Affordable?

Creating a budget as a framework to know what you can actually afford is a good idea. Viewing homes that are beyond your price range is dangerous business. Make a list of your must-haves to stick to your budget and ensure that you don’t get in over your head.

Do you Have a Down Payment?

Paying cash for a new home without borrowing any money is, of course, the best option but usually unrealistic. Planning for 100% financing is also unrealistic, so you should plan to pay something upfront. 10% down can get you a decent loan, you’ll be expected to pay mortgage insurance. Your best bet is to save until you have a 20% down payment ready to go. Having 20% to put down vastly increases your lending options.

Are You Prepared for Closing Costs?

Apart from a down payment, you may also need to pay for closing costs for a home inspection, loan origination fees and title fees. Occasionally, you can negotiate so the seller pays these costs, but don’t count on it. You’ll need to have the funds available in case the fees are your responsibility.

Buying your first home is a momentous occasion and the start of a new chapter in your life. Just be sure you’ve done the work I’ve detailed above to put you in the best possible position.

If you need a recommendation for a sharp, local Realtor or if you’d like to get pre-qualified for a mortgage so you know your option, please don’t hesitate to reach out—I’d be happy to block off some time to talk and help you get started.