Purchasing a home for the first time is both exciting and stressful. Granted, the idea of owning your own home, without having to worry about paying rent at the beginning of every month, is one that will warm anyone’s heart.
However, the increased financial obligations that come with being a homeowner may deny you a good night’s rest.
But don’t fret! You can always opt for a mortgage loan.
As a first-time homebuyer, you are striving to get on your feet financially. Thus, if you choose to acquire a home mortgage, you will benefit from borrower-friendly features like down payment assistance and easy approval.
But first things first! Here’s how to obtain a mortgage loan for the first time:
Start saving for a down payment
Never underestimate the power of a down payment when you are looking to obtain a mortgage. This is because you will need to put up an initial deposit on the home of your choice to qualify for a mortgage.
Ideally, you should have ten percent of the loan amount saved up as a down payment. Of course, this depends on the lender that you choose. For a majority of lenders, the down payment ranges from 2.25% to 20% of the purchase price of the home.
Check your credit score
It goes without saying that your credit score is always grounds for attracting the best mortgage deal. As such, you should always strive for a high credit score (above 720) and obtain a copy of your credit report before embarking on the home financing process.
If the score is low, you can always improve it by paying off debts and keeping balances low before applying for a loan.
Get all your financial documents in order
When applying for a mortgage for the first time, your lender will require all of your financial documents to accelerate your application.
At a minimum, you should provide your most recent W-2 form, your last two pay stubs, your brokerage statements as well as tax returns for the last two years.
There exists a vast array of lenders who offer different interest rates for different mortgage amounts.
As such, it is important to understand all of the important components that will determine your mortgage price so that you will know what you are settling for.
A majority of lenders want you to be pre-qualified before approving a mortgage. The pre-qualification process for a mortgage involves providing your financial information such as the number of investments and savings that you have as well as your income.
Once this is determined then you will have a better sense of the amount that you can borrow and the price range of the homes that you qualify for.
Get a mortgage
Once you successfully go through the aforementioned processes then you will qualify for a mortgage loan. However, there are loans that are often associated with closing costs that run between two to five percent of the total loan amount.
Therefore, do not be surprised when the down payment is not the only cost that you will need to cover.
Exploring all your mortgage options is the smartest thing to do as a first-time borrower. Always take a look at what traditional bank mortgages offer and compare those offers to other subsidized loans. Once you look at the numbers, determine whether the loans will favor you.
However, if you need a simple and understandable mortgage process that will save your time and money, Altrua Financial has got you covered! Contact us today and we will guide you through the mortgage loan process.