Mortgage Loan Tips for First-Time Home Buyers

Those who are getting their first mortgage may be a bit uncertain about what they are taking on. It’s a lot to commit to—the average person spends between $250,000 and $350,000 on a home these days, and even in smaller monthly payments, that’s not pocket change. Therefore, it’s important to make sure that you get the right mortgage and that you know what you’re getting into, as well as how to navigate the mortgage lending process.

Preparing for a Mortgage

There are several steps involved in the mortgage loan and home-buying process, but preparation sets the foundation for everything. Make sure that you start saving early, and plan for closing costs, a downpayment, and moving expenses. Your downpayment will be a percentage of the home cost, which can vary significantly. Some people can get a mere three percent downpayment, while others might have to put 20% down before they can get approved for a mortgage.

Here’s what that means in practice:

• If you buy a $250,000 home, three percent would be $7,500 down.

• If you buy a $250,000 home, 20% would be $50,000 down.
  
  

See how stark of a contrast that is? This is why it’s important to understand your credit and loan options so that you’re not faced with a huge downpayment you can’t afford.

You’ll also need to decide how much you can afford to spend on a home, check and improve your credit to get the best loan terms and rates, and explore all the options that you have for getting a mortgage. Speaking of which, let’s talk about those tips next.

Choosing a Mortgage

While preparation is key, selecting your mortgage is the most important part of the process. You can get as many mortgage loan quotes as you’d like, although it’s best if you can find a mortgage broker who can handle the process of applying with multiple lenders for you. In either case, you should compare at least three or four lending options to make sure that you get the best fit.

Look for things like:

·  The total loan amount

·  The interest rate

·  Whether the loan is fixed or adjustable

·  The loan term (usually 15 or 30 years)

·  The downpayment required

·  Closing costs (which can vary from one mortgage option to another)

You will also want to choose a mortgage lender that has reputable customer service and will be there when you need their help. You will be able to choose between:

·  Conventional mortgages (for those with good credit)

·  FHA loans (for those with less-than-perfect credit)

·  USDA loans (for agricultural purchases or rural home buyers)

·  VA loans (for veterans and current service members)

Most people get a conventional mortgage, although several also opt for the FHA programs that are available to help first-time home buyers and provide more incentives than a conventional program. 

Get a Pre-Approval

One of the best things that you can do is to get a mortgage loan pre-approval. This will allow you to go into the home shopping process with confidence that you can choose any home within your allotted budget and there will be no qualms about financing. Too often, people shop and then worry about financing, only to find out they can’t afford a home right now after all, or that they can’t get approved for the kind of financing they want. A pre-approval is like your golden ticket to home shopping.

Work with the Experts

The best thing that first-time home buyers, or any home buyer for that matter, can do is to work with a dedicated mortgage broker and real estate agent. They will help you through the entire process and make it easy to buy your first home.