First Time Home Buyers: 5 Must-Know Mortgage Tips

1/22/2018

5 First Time Home Buying Mortgage Tips

Are you one of the millions of first time home buyers in the US? You're in good company!

One of the most important aspects of becoming a new home buyer is understanding the process of getting a mortgage.

Here we've outlined 5 essential tips for a successful mortgage application process.

Before you begin house hunting, you have to do a little homeowner prep work first.

The first and most important place to start is understanding the mortgage loan process.

Here are 5 essential prep points first time homebuyers need to know to get a mortgage loan.

1. Know Your Credit Score!

Knowing your credit score determines how much house you can afford to buy. It also can determine how much interest you pay on the loan. Your mortgage loan officer will be your guide for this.

2. Do the Math. Find Out How Much You Can Afford to Borrow

Once you know your credit score, your lender will be able to give you a rough estimate of what you can afford to buy.

Generally, your monthly housing payment is generally figured on no more than 28% of your pre-tax income.

For total debt ratio, including your mortgage payment, it's usually no more than 36%. These are the most commonly used percentages.

3. Prepare All Legal Documents

This includes employment status, earned income, tax returns, identity documents, and bank statements. Depending on your lender, there could be others, but these are the main ones.

Make sure to have all these documents prepared in advance. It will speed up the application process.

4. Get Mortgage Pre-Approval

If you and another person are both interested in the same property, the one with a mortgage pre-approval will have the edge.

Why? Sellers don't want to waste time negotiating with you if they don't know for sure you can afford to buy their property.

5. Calculate Your Closing Costs

Closing costs typically run between 2%-3% of the mortgage amount. Just like a down payment, closing costs have to be factored into your calculations.

Taking these 5 preparatory steps will put you way ahead of the game.

On a final note, lenders require that borrowers purchase title insurance for the lender, but it isn't required for the borrower to do so.

Banks want to protect their investment, and you should, too! So buy homeowner's title insurance to protect the biggest investment of your life.

When you're ready for that step, turn to Lilly Title & Company. We offer competitive rates and comprehensive coverage, as well real estate settlement closings.

What Our Clients Are Saying

Great place to do your home buying with. Tammy knows what she is doing. Carol Ashman

The crew at Lilly Title and Settlement are the best! When they handle a settlement I never have to worry. I never have to ask about the status of a closing because they send me weekly updates and if there is anything I need to know in the meanwhile, they contact me right away. As a busy Realtor that's extremely important. Their knowledge and years of experience are simply unbeatable. In all the years I have worked with them, I have not seen a mistake. Tammy Lilly is meticulous in making sure every document is checked and double checked before it leaves her office. I always trust Lilly Title to operate with total integrity and to always have a positive "can do" attitude! Ed Davis, Realtor

Millie Hue link

7/10/2018 12:08:56 am

Thanks for helping me understand that getting a mortgage approval will give a person more advantage when they are interested in a property that is also being eyed on by another customer. With that in mind, I will suggest this to my cousin because I heard that the property that he like was also being checked by another person when he went to inspect it a day ago. This tip will help him get the house that he really wanted.

Susan Vincent link

7/10/2018 09:29:53 am

Hi, Millie,
Thanks so much for your comment! We're very glad that the post was helpful.

FactorLoads link

9/24/2018 08:09:41 pm

Thanks for sharing this tips. My husband and I are planning to buy house. We think that it is a very good investment for us. We're going to definitely follow these tips.

9/25/2018 01:02:52 pm

Glad it's helpful!

Raymond Cooper link

10/1/2018 10:39:22 am

My wife and I are looking at getting our first home in the near future. I like how you point out that our credit score is essential to consider since it will determine how much we qualify for in a mortgage. I'll definitely make sure I pay close attention to our credit score before applying for a mortgage.

10/1/2018 03:44:12 pm

Good plan!

Business Cash Flow link

11/4/2018 05:50:06 pm

Thanks for sharing this article. These tips are all very helpful. I think that giving more attention to have a good credit score can help. I will definitely follow all these tips.

11/5/2018 02:23:08 pm

I'm so glad it's helpful!

Business Working Capital link

11/18/2018 06:00:05 pm

Thanks for sharing this article. This is very helpful for us. We are planning to buy a new home. We'll definitely follow your tips. I also think that it is really better to know our credit score because we can use it for buying home or getting a loan.

11/19/2018 09:28:08 am

Glad it's helpful to you!

Tim Yaotome link

12/1/2018 02:19:07 am

My brother is currently studying in Medicine and he asked me for help over the phone the other day to help him find a home for him to move in once he graduates. Since you mentioned that one should compute how much it would take to close a sale, I thought to recommend him to a mortgage company. Doing this will help him get enough money to find the right house while negotiating a way to pay for the mortgage and paying for his medical school loans at the same time.

12/1/2018 07:17:02 am

Very good idea!

Factoring Finance link

5/1/2019 04:52:59 am

Yes, I totally agree with what you said. I think that preparing all the legal documents will definitely help to avoid future issues and the transactions will be more secured. Thanks for sharing this article.

5/1/2019 06:53:05 am

You are most welcome! Thanks for leaving a comment.

We Factor link

5/14/2019 03:33:21 am

Yes,I totally agree with what you said. I think that it is really important to prepare all legal documents to avoid future issues. It is also a great reference in the future. Thanks for sharing this article.

5/14/2019 06:27:22 am

You're welcome!

Comments are closed.