Five Tips for Securing Your First Mortgage

 It's an exciting milestone to get your first mortgage. However, the process of getting one can feel very overwhelming. There are so many options available and there are various factors to consider, so the process of getting a mortgage can feel very complicated. 

You can make your home buying journey a smoother one, however, with our five essential tips to help you to secure your first mortgage with confidence.

Image source: Pexels

1. Know your options. When you're looking for a mortgage, you'll probably approach your bank first and foremost to see what the options will be. However, you shouldn't overlook private mortgage lenders. These lenders can offer more flexibility and competitive terms, especially if you have a unique financial situation on your hands. Private mortgage lenders may be more willing to work with you if your credit score isn't perfect or if you don't have a large down payment saved. However, you do need to do your research and ensure that you're comfortable with their rates and their terms.

2. Know your credit score. You can't secure a mortgage without knowing what your credit score is because the worst thing you could do is approach lenders who would definitely not lend to you. A higher credit score typically means that you are low risk, which can lead to better interest rates and loan terms before you apply, check your score and if necessary, take the time to improve it. Pay off any outstanding debts and avoid opening anything new.

3. Save a larger down payment. Most home buyers are excited to put down as little as possible, but saving for a larger down payment can benefit you in the long run. At least 20% as a down payment can help you to avoid private mortgage insurance, and that's often required if your down payment is less than 20%.

4. Get pre approved. You should not start window shopping for homes because you will fall in love with something that you know you can't afford. It's smart to get yourself pre approved for a mortgage and this is a process where a lender will evaluate your financial situation and give you a conditional commitment for a loan. This is a process that gives you a better understanding of how much you can borrow and show sellers that you are a serious buyer. Being pre-approved helps you to avoid the disappointment of falling for a house that you really can't afford.

5. Look for the best rates. Not all mortgages are created equal. It's essential that you shop around and compare rates and terms with different lenders so that you are getting the best possible deal for your affordability. Even the smallest of differences in interest rates can significantly impact your monthly payments, and the total cost of your loan overtime can be affected. Consider reaching out to multiple lenders, including banks and credit unions and online lenders to see what your options may be.

It's a big step to secure your first mortgage but with the right preparation and research you'll be able to set yourself up for good success.