7 Tips for Getting Your First Mortgage

by Courtney Christensen

Your very first mortgage – a daunting prospect, right? It’s definitely one of the biggest financial decisions you’ll make in your lifetime, and it’s a choice you may be stuck with for several years. It’s important to get this one right, and researching is the best place to start! While your first mortgage is not likely to be your last, it can be the hardest one to get through. Here are seven tips to make your experience as simple as possible.

  1. Pre-Approval – The very first step towards getting a mortgage is a letter of pre-approval from a qualified lender. Most banks can offer this letter, but you’re likely to get a more personalized experience from a mortgage company like Ruoff Mortgage. The purpose of a pre-approval is double fold. First, it lets you set a realistic budget for a home. Your lender will gather your information and let you know how much they are able to lend to you. Second, it speeds up your mortgage process. Once you’re pre-approved, the actually application process goes much smoother. This is because you’ve already given your lender most of the information they need in order to finalize your mortgage.
  2. Negotiations – At the negotiation step of buying a home, you have an opportunity to lower your monthly payment by offering a lower price on the house. A negotiation like this one is best done with a real estate agent. This is because agents deal with negotiations on a regular basis and are adept at finalizing a price that both the buyer and seller can agree on. Be aware that negotiations usually only work in your favor if you’re currently experience a “buyer’s market” in your area. This is when there are more sellers than buyers, causing buyers to have the upper hand in negotiations.
  3. Credit Score – Your credit score has a lot to do with the type and cost of the loan you receive. For instance, many government funded loans require a very low credit score while more conventional loans need a higher one. Requirements for your credit score can be anywhere from 520 to 680 depending on the type of loan you get and current market conditions. Therefore, it is best to get your credit score up before you apply for a mortgage – this will ensure a much easier transaction.
  4. Interest Rate – The interest rate on your mortgage is one of the only things you cannot control during your mortgage process. Interest rates change daily based on the current economy and housing market conditions. You can get a lower interest rate with a high credit score, but your best option is to inform your lender of the interest rate you want. That way, they can inform you when the time is right.
  5. Down Payment Options – The traditional down payment is 20% of the home’s sale price, but in many loan options you are able to put down less. Programs like FHA, for example, only require a 3.5% down payment. USDA requires 0% down. There are also a ton of down payment assistance programs for first-time buyers. There are four main types of DPA programs: loans paid alongside your mortgage, loans with a deferred payment plan (typically 5-10 years), forgivable loans, and grants which do not need repaid. Whatever DPA you apply for, you’ll be saving money.
  6. Application – Once you are ready to apply for your mortgage, the next step is to gather documents you’ll need to apply for a loan. Some of these documents may take time to collect, depending on whether you have them on hand or not. Some of these items include your driver’s license, tax returns, W2’s, pay stubs, and bank statements. Remember, if you have a pre-approval letter, most of these items are already submitted to your lender – cutting your process time dramatically.
  7. Digital Closing Experience – Ruoff Mortgage offers Digital Closing Experience. A digital signature, otherwise known as e-sign, is an electronic way of capturing an individual’s handwritten signature. With special encryption and an extra layer of security, digital signatures provide an authentic way to give your signature from any device with an online connection. This way, when you arrive at the closing table, you’ll only “ink sign” a few documents. Spend minutes instead of hours at the closing table!

We hope these tips help you feel more confident going into the mortgage process! Most importantly, remember to have fun picking out your first home.

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