10 Tips For First-Time Home Buyers To Get A Mortgage Loan

First-time home buyer grants and loans are great ways to help you buy your first house, but finding the right one can be tricky. With so many different types of programs available from different sources, you might think that it’s impossible to find one that helps with your specific needs and situation. Luckily, there are a few simple steps you can follow that will have you looking at the right loans and grants in no time at all. With this handy guide, learn how to qualify for first-time home buyer loans and grants in only 10 easy steps!

10 Tips For First-Time Home Buyers To Get A Mortgage Loan

1) Check Your Credit Score

Checking your credit score and credit report is one of the first steps that you should take before buying a home. You can check your credit score for free, but you have to pay to see your full credit report. This information will allow you to qualify for a mortgage loan and know what type of mortgage loan program would work best for you.

2) Know What You Can Afford

The first step to buying your first home is understanding what you can afford. This means setting a budget, estimating your down payment, and knowing what type of mortgage loan you need. The best way to set a budget is to look at your monthly income and subtract costs like rent, debt payments, food, and transportation. Next, you'll need to decide on the size of the home that you would like to purchase as well as how much of a down payment you are able to afford.

3) Get Pre-Approved

Getting pre-approved for a mortgage loan can be the first step in home buying. It's also a great way to know how much you qualify for and what your monthly payments will be.

Here are 10 tips for first-time home buyers to get a mortgage loan: 

  1. Save up at least 20% of the purchase price of the home as a down payment 
  2. Request a prequalification or preapproval letter from a lender 
  3. Make sure you have enough cash reserves 
  4. Stay within your budget 
  5. Build good credit 
  6. Have good savings 
  7. Stay on top of bills 
  8. Know about the property tax, homeowners insurance, and HOA fees 
  9. Get an inspection 
  10. Ask about other resources available to first-time home buyers such as grants and first-time buyer programs. First-time home buyers should research all their options before they make any decisions that could affect their future finances.

4) Shop Around for the Best Mortgage Rate

Buying your first home is a big decision. One of the most important decisions you'll make is to get a mortgage loan. But, with so many lenders out there, where do you even start? The tips below can help. 

First, shop around for the best mortgage rate possible. When looking at rates, keep in mind that there are usually only minor differences between rates offered by different lenders and banks.

5) Consider an FHA Loan

An FHA loan is a great option for first-time home buyers because it has low down payment requirements and an easier qualification process. This type of mortgage loan can be used to purchase a home for up to $294,515. The borrower must be a US citizen or permanent resident and have the ability to repay the loan according to FHA guidelines.

6) Save Up For a Down Payment

One of the most important factors in qualifying for a mortgage loan is having a down payment. In order to qualify for a loan, you'll need to save up at least 20% of the home's value and it should be saved for at least two months. If you don't have that much money saved up, there are other options such as FHA loans and gifts from family members.

7) Look Into State and Local Programs

There are plenty of options for first-time home buyers, and the best way to find out what's available in your area is to speak with a local realtor. These professionals know how to get the most appropriate loans, grants and other programs that will help you get approved for a mortgage.

8) Don't Forget About Private Mortgage Insurance (PMI)

When you are buying a home with a mortgage, PMI is an insurance product that protects the lender in case of foreclosure. It is typically required when you put less than 20% down on your home purchase or have a loan amount greater than 80% of the value of the house. We recommend saving as much as possible for your down payment to avoid paying for PMI.

9) Make Sure Your Lender Knows You're a First-Time Homebuyer

If you're a first-time home buyer, make sure to include your first-time homebuyer status on the application. This will help ensure that you get the best interest rate possible and don't have to worry about being declined for a loan.

10) Have Realistic Expectations

  1. Make sure you have a down payment of 10% or more to avoid paying PMI (Private Mortgage Insurance). If you can't put 20% down, then you need to buy a less expensive home.
  2. Shop around for the best mortgage rates and terms available in your area before submitting an application with a lender. These rates will change over time, so it's always smart to shop around. 
  3. Take advantage of special loan programs like FHA loans, VA loans and first-time home buyer grants if they are available where you live. The most important thing is to do research on these various loan options before applying for one! 
  4. Know your credit score: It is crucial that you know what your credit score is before applying for a mortgage loan because this information will be used by lenders to determine whether or not they will approve your loan. 
  5. If your credit score isn't great but you still want to get a mortgage, talk with your lender about how much of a down payment you would need to make and how large of a monthly payment might work for you.