5. How large should my down payment be, and where can I get that?
Put down 20 percent of the purchase price if you can. As of Oct. 1, federal rules essentially ended what was the seller giving the down payment through a nonprofit.
"If it's not truly your money, you're not truly at risk," said Stanley Duobinis, president of Millersville-based Crystal Ball Economics.
Your 20 percent down payment not only tells the lender you're vested in the purchase, but it goes a long way toward getting you the mortgage and a lower interest rate, he said.
Some of it can be a gift, not a loan, from parents, but it's better if it's really yours.
And another thing: Lenders require private mortgage insurance for a loan for more than 80 percent of the house price to protect themselves. Put down 20 percent and you'll avoid PMI. Consider, as an alternative, investing in life insurance to cover the mortgage, advises Isberg.
6. I have a good work history, but I don't have that much for a down payment. What should I do if I want to buy?
Look for programs that help you. Remember: A first-time buyer can be someone who hasn't owned in three years. Government-run assistance programs, such as job-based and location-related, are thriving. Some provide grants, others loans that are forgiven if you stay in the house at least five years. Many require completion of an ownership counseling course.
Tarsha Goins, a 13-year city Solid Waste employee, didn't think she'd be able to buy after her efforts fizzled in 2006. Since then, she set a course to shop less and save more while paying down her credit card balances. Meanwhile, she boned up on programs that could help her and stayed in touch with a lender who deals with them.Last spring, determined to buy a house by her 36th birthday, she used $2,000 in savings toward a down payment on a $125,000 end-unit rowhouse in Waverly. That got her another $22,250 from a line-up of matching programs, plus a lower interest rate through a state program. Even with a mortgage payment higher than she had paid in rent, Goins said she has enough financial room "to enjoy life."
7. What's out there for move-up buyers?
If you're a move-up buyer, stay tuned. The $560,000 mortgage cap for the Baltimore area for Fannie Mae- and Freddie Mac-backed loans is set to end on Dec. 31, and then drop to 115 percent of the median home price. Above that amount - and this typically affects move-up buyers, not first-timers - you need a different kind of loan, and that has different underwriting criteria and, depending on your lender and your credit, a higher interest rate.
