Owning a home is a central part of the American Dream. For most homeowners, a house is much more than just a place to live. It is the solid evidence of all your years of hard work. 

The dream of owning a home is within reach for a growing number of Americans, thanks to mortgages. As of 2019, about 63% of homeowners in the country have mortgages.

First time home buyers aspiring to take a mortgage can benefit from expert mortgage tips that can help them make the right decisions. The fact of the matter is your mortgage will probably be the biggest loan you ever take. Making any mistakes can be the source of ongoing frustration for many years down the line.

It’s why we’ve prepared this comprehensive guide that contains essential advice for first-time homebuyers who intend to take a mortgage. With the home mortgage tips below, you should be able to navigate the process easily and go on to buy your dream home without hassles.

1. Save for a Down Payment Early Enough

Most lenders require a 20% down payment for home mortgages. However, some lenders can permit much less. When you’re buying your first home, you can find mortgage programs that allow you to put down as little as 3%.

What you need to keep in mind, however, is that the smaller the down payment you put in the beginning, the higher the costs you’re likely to pay. These costs are usually in the form of mortgage insurance and higher interest rates.

Generally, it’s best to save for as big as a down payment as possible.

2. Know Your Mortgage Options

There are a variety of loan programs in the market today, each with its benefits and drawbacks. Research these options and decide which one works for you. If you have difficulty raising a substantial down payment, you may want to consider:

Conventional mortgages 

These mortgages conform to standards set by entities sponsored by Fannie Mae and Freddie Mac. They require down payments as low as 3%. Qualifying for these loans can harder than other loans, especially government loans.

FHA loans

These are mortgages insured by the FHA. They permit home buyers to put down as little as 3.5%. These loans are popular among first home buyers with credit challenges or little savings.

VA loans

These loans are guaranteed by the Department of Veterans Affairs. They often require no down payment.

As we pointed out earlier, the higher the down payment you make, the lower the monthly payments you’ll need to make. 

Homebuyers looking to pay the smallest mortgage possible can opt for the 30-year fixed mortgage. If you can comfortably afford to make larger monthly payments, opt for mortgages with shorter terms. There are also adjustable-rate mortgages that guarantee you low interest rates during the first few years of your mortgage.

3. Check Your Credit 

Your credit is going to be a huge determinant of whether you’ll be approved for a mortgage or not. If approved, your credit score will also determine the loan terms and your interest rates. 

Before starting to hunt for a home, it’s thus essential to check your credit. In case there are any errors in your credit report that are dragging down your credit score, dispute them early enough. Find opportunities to strengthen your credit, such as reducing any outstanding debts. 

4. Compare Mortgage Rates

Comparing quotes from different lenders is the smartest way to get the best deal possible. Visit at least three lenders and check out their quotes and fees. A seasoned mortgage broker can also help you know which lenders in the market you should consider.

Inquire from each of the lenders whether they allow clients to buy discount points. This means prepaying the mortgage interest upfront, so you get a lower interest on the mortgage.

Be careful not to jump at offers with suspiciously low interest rates. It could mean hidden charges and fees.

5. Secure a Preapproval Letter

Once you’ve decided on a mortgage that’s right for you, worked on your credit, and picked a suitable lender, it’s time for the next important step. Your lender will examine your finances and, if satisfied, pre-qualify you for a mortgage. This prequalification is an estimate of how much your lender is willing to give you, based on your income and debts.

It’s a smart idea also to get a preapproval letter. This letter will make your bid look more serious to a home seller when you finally identify a home you want to buy.  

6. Begin the Home Hunt

With a preapproval letter in hand, you can confidently begin looking for a suitable home. You’re now likely to outshine other home buyers. However, there are a few things you can do to help you secure the right first home for you, including:

Working With a Seasoned Agent 

An experienced agent is the best investment you can have as a first-time home buyer. They know the real estate market well and can point you in the direction of your dream home. Your agent will also help you in the negotiation process to get you the best deal.

Pick the Right Neighborhood

You’re probably going to live in the house for decades, so it’s essential that the neighborhood be one you’re happy with. Generally, you want a secure area that has lots of essential amenities. Visit the area on various days during different times of the day to check out activity levels, traffic, noise, lighting, and so on. 

Optimize Open Houses

While visiting various homes during open houses, keenly observe the home’s overall condition. Take note of any signs of disrepair and ask lots of questions such as the year the home was built and how old appliances are. You can also take that opportunity to visit the house more than once, just to get a closer look at the house before purchase.

Use These Mortgage Tips to Buy Your First House

Buying a home is a dream come true for every American. Getting a mortgage to finance this purchase can sometimes be nerve-racking. With these pro mortgage tips, however, you can secure the home loan you need to buy your very first home.

Are you looking for a mortgage solution tailored to fit your needs? Contact us today.