5 Easy Steps to Getting a First Mortgage

If you’re like most home buyers, you need a mortgage to realize your dream of home ownership. While a home loan can provide the keys to your own property, getting your first mortgage can be a little intimidating.

What do you do? Who do you call? Can you even qualify for a loan?

These questions and more might run through your mind. Yet, buying a house isn’t as hard as you might think. The truth is, many first-time home buyers successfully apply for mortgages every day, and so can you.

Here’s what you can do to make the process of getting a mortgage easier.

Step #1: Assess Your Credit

Make sure your credit is in good shape before you apply for a mortgage or compare mortgage interest rates. If possible, wait until you have a credit score of at least 700.

A higher score gives you access to more mortgage programs and helps you get a lower mortgage rate. A low rate can increase purchasing power, and in turn, you’re able to get more house for your money.

Improving your credit doesn’t happen overnight, so start early. Get a copy of your credit report before you’re ready to move forward with a purchase. Dispute errors on your credit report, pay your bills on time, pay down debt, and don’t apply for any new credit if you already have a robust credit history. These steps can add points to your credit score, thus increasing your chances of getting approved.

Step #2: Organize Your Paperwork

Some first-time home buyers are surprised by the amount of paperwork involved in the mortgage process.

A landlord may only request copies of recent pay stubs and maybe an employment verification letter. It’s a different ballgame when getting a mortgage.

You’ll not only submit recent pay stubs, but you’ll also need to provide the previous two year’s tax returns, business tax returns (if you’re self-employed), bank account statements, retirement/investment account statements, and letters verifying the source of any gift funds.

Don’t wait until the last minute to hunt down these documents. Not having your paperwork in order could delay the entire process. Gather everything you’ll need in advance. The sooner we receive your supporting documentation, the sooner we can prepare your loan file.

Step #3: Figure Out How Much You Can Afford

Some first-time home buyers use a mortgage payment calculator or a mortgage interest calculator to estimate how much they can spend on a home. While these calculators can provide a rough estimation of affordability, they aren't the most reliable tools.

With that being said, meet with one of our loan experts and get pre-approved—before you start looking at houses.

A pre-approval involves a check of your credit, income, and assets to determine whether you’re eligible for a loan, and if so, the maximum loan amount you can receive.

You’ll know exactly how much you’re able to borrow, and since you’re working with a lender, sellers will know that you’re a serious borrower.

Step #4: Don’t Make Any Drastic Financial Changes

Keep in mind that a pre-approval doesn’t guarantee a loan. Nothing is final until the underwriter completes a review of your loan file and gives the green light to schedule your closing date. Don't make any drastic changes to your finances or employment status, or else you could jeopardize your loan approval.

In other words, don’t quit or change your job, and don’t take on additional debt. If the appraisal comes back okay and your financial status remains the same, you should be in good shape as you head towards closing.

Step #5: Start the Loan Process

The loan process formally starts as soon as a seller accepts your offer and you receive a signed purchase agreement.

Next, you’ll receive a Loan Estimate that explains your estimated mortgage terms, including your closing costs. Review this document and let us know whether you intend to proceed with the loan. If so, we’ll schedule a home appraisal and then deliver your entire loan file to the underwriter for review.

Whether you’re looking to compare interest rates, or you have questions about getting a first mortgage, the loan experts at Blue Spot Home Loans can help. Give us a call at (800) 976-5608 or fill out the contact form to get started!