First-Time Homebuyers: How to Get a Loan

If you’re a first-time homebuyer trying to figure out how to get a loan, it might feel like you’re wading through unfamiliar territory. Fortunately for you, the process isn’t as complex as it might seem. While it’s true that there are several steps involved, understanding them and knowing how to navigate them can help you get the loan and the home you deserve.

4 Things First-Time Homebuyers Should Do Before Getting a Mortgage

1. Get Your Credit In Order

Bad credit, no credit, or outstanding credit marks will work against you when it comes time to purchase a home. As such, it’s well worth the time and effort it takes to clean these things up before you go looking.

If you have a low credit score, put off your home search for about six months and work to bring it back up. This may mean paying down debt, restructuring credit cards that are at or near their limits, and resolving credit penalties currently on your account.

2. Consolidate Your Down Payment

While there are many loan options out there that make it easy to purchase a home with a small down payment — or even no down payment at all — it’s always wise to put down as much as you can afford on your first home.

This does two things: it makes your path to equity shorter and it decreases the amount you’ll pay each month. If you haven’t been saving for a home, you may have a difficult time finding a mortgage broker who will work with you. If you have been saving for a home, now is the time to consolidate that money into one account.

3. Shop Around

A mortgage is a major debt, so you’ll want to shop around to find the best rate. It may surprise you at how much mortgage terms can vary from lender to lender, and you can easily save yourself thousands by seeking out a different mortgage broker to work with.

4. Get Preapproved

Once you’ve gotten your credit and down payment in order, you’ll want to get preapproved with the mortgage broker of your choice. Not only does preapproval help you understand what you can and can’t afford, and how much you’re likely to pay each month in housing expenses, but it will also allow you to shop with confidence, since you already know you can afford the home you’re falling in love with.

An Exciting Time for Frist-Time Homebuyers

Purchasing your first property is an exhilarating experience, but it’s easy to feel overwhelmed. For many people, the primary source of stress is the financial aspect of the home purchase.

Luckily, you can get this under control by taking a smart and proactive approach to home purchasing. Instead of floundering through it blindly, know which steps you’ll need to take and develop a plan to reach them. Not only will this make the process less stressful, but it will also help you get the best loan you can.