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When thinking about taking the leap into buying a home the first thing you will want to do is determine just how much you can afford for the monthly housing
payment and how much you can afford to invest in the down payment. This is where the mortgage lender comes into the picture. Compare a variety of lenders that know Baltimore City and offer competitive products and quality service.
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When determining your monthly mortgage payment, you should combine payments for loan principal, interest, property taxes and homeowner's (hazard) insurance; often referred to as P.I.T.I. Ratios are a calculation of your monthly gross income against the combination of your mortgage payment and other monthly debt payments; debt versus income. Various loan products may have different ratio thresholds and allow you to borrow different amounts.
The larger the down payment, the less money you need to borrow, which means a lower monthly payment. In addition to your down payment and monthly payments, you will need money to pay for closing costs, moving, appliances and other miscellaneous items. The obvious source of money for your down payment is either your savings or the proceeds from the sale of a home you already own. There are also several down payment assistance loan and grant programs available in Baltimore City, including: DSELP, Buying Into Baltimore and Live Near Your Work.
Provided by a private mortgage insurance company and paid for by the buyer, PMI protects the lenders if a borrower defaults. PMI is often required on mortgage loans when the down payment is less than 20%.
Before the buying process can begin, a lender needs to examine the stability of your income, your credit payment history, and your funds (preferably savings) for upfront costs in order to determine if you qualify for a mortgage.
Prequalifying can benefit you, your agent and the seller by helping all understand just what you can afford.
Although there are hundreds of different mortgages available, they all fall into only a few basic varieties. By narrowing your choices, the process of picking the right mortgage becomes much easier. One of your first
decisions should be between a fixed rate and an adjustable.
 Fixed Rate Mortgage: the interest rate remains constant through the life of the mortgage.
Adjustable Rate Mortgages (ARMs): the interest rate is adjusted either up or down at specified times during the mortgage term.
Ratios tell the lender the maximum mortgage payment range that will fit their guidelines based on your pre-qualifying information. That figure may be higher than what you want to spend, so be sure that you are comfortable with the figures before committing.
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