Understanding What a Mortgage Is
A mortgage is a loan from a lender to help you buy a home. You agree to repay it over time—usually 15 to 30 years—with interest. If you don’t repay, the lender can take the home back. Don’t worry though—most buyers handle it just fine with the right guidance.
Step 1: Check Your Credit Score
Your credit score tells lenders how responsible you are with money. Most lenders prefer a score of 620 or higher, but the better your score, the better your interest rate. Get a free credit report and review it for errors.
Step 2: Save for a Down Payment
You’ll usually need to put some money down—often 3% to 20% of the home’s price. Some loans allow lower down payments, especially for first-time buyers. More money down means smaller monthly payments.
Step 3: Understand the Types of Mortgages
There are several types of loans. Here are a few of the most common:
- Conventional Loan – Great for buyers with strong credit.
- FHA Loan – Requires a lower down payment; ideal for first-timers.
- VA Loan – For veterans and active military, with no down payment.
- USDA Loan – For rural buyers, also with no down payment.
Step 4: Get Pre-Approved
A pre-approval shows sellers you’re serious and tells you how much you can borrow. It involves submitting financial info—like income, debts, and bank statements—to a lender.
Step 5: Find a Home Within Your Budget
Once pre-approved, shop smart. Keep monthly payments (including taxes and insurance) under 30% of your income. Don’t forget about extra costs like closing fees, inspections, and moving.
Step 6: Apply for Your Mortgage
When you’ve found the right home, it’s time to finalize your mortgage. Your lender will verify your income, credit, and other documents. Don’t make any big purchases or change jobs during this time!
Step 7: Close the Deal
At closing, you’ll sign a stack of documents, pay your down payment and any fees, and officially become a homeowner. You’ll get the keys once the paperwork is done.
Final Tips for First-Time Buyers
- Stay within budget. Just because you’re approved for more doesn’t mean you should spend it.
- Ask questions. Your lender and real estate agent are there to help.
- Compare loan offers. Even a small difference in interest rate can save you thousands.
Need Help Getting Started?
We’re here to guide you every step of the way. Whether you’re just thinking about buying or ready to apply, our team is ready to support you.
