Tips for First-Time Homebuyers Applying for a Mortgage

September 29, 2022
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Buying a house for the first time might be the most exciting and nerve-wracking experience of your life. Owning a home is usually the most significant investment you will ever make. Therefore, before rushing to buy your dream home, it is crucial to ensure that you are ready for a long-term commitment such as a mortgage loan.

Understandably, some homebuyers don’t even think about finding a mortgage lender or broker until they’ve found a house they want to buy. However, you may regret not consulting with a mortgage broker beforehand.

For example, finding out that your credit score is too low, or your DTI (debt-to-income) ratio is too high after choosing the perfect property can be unpleasant. In fact, your dream home may slip from your hands due to a lack of mortgage planning.

However, knowing what to do and what not to do will make your home-buying process easy and stress-free. So, if you have decided to buy a new home, it’s time to consult with experienced mortgage experts at PierPoint Mortgage.

Our team specializes in assisting homebuyers in acquiring personalized mortgage loans to make your home-buying process smooth and hassle-free. Additionally, we have compiled a list of suggestions to help you avoid some of the most common mistakes new home buyers make.

Tips for successfully applying for a mortgage

Here are a few tips that can help you successfully apply for your first mortgage:

1. Improve your credit score

Your credit score is among the top factors that influence the mortgage decision. Many new homebuyers don’t bother getting a credit check until they want to apply for a mortgage. As a result, if their credit score doesn’t qualify it might be too late to improve it to meet the requirements specified by the mortgage lender.

Therefore, before you apply for a mortgage, it is crucial to know your credit score and make consistent efforts to improve it before it’s time to apply for a home loan.

Here are a few ways to improve and maintain a good credit score:

  • Make sure to timely pay your existing loan payment
  • Avoid defaulting on loan installments
  • Always pay your credit card bill on time
  • Consult with your bank regarding a higher credit limit
  • Do not exceed your credit utilization limit
  • Review and dispute any errors in the credit report
  • Avoid getting multiple credit cards

2. Get Pre-approved

One of the biggest mistakes first-time home buyers usually make is they don’t apply to get pre-approved before going house hunting. As a result, you may be disappointed when you find the perfect house but later it turns out you can’t afford it.

Applying for a mortgage pre-approval is an excellent way to get an accurate mortgage loan estimate. It would let you know your maximum loan limit, which can help you set a much more realistic budget.

Moreover, getting pre-approved can help you get loan approval much faster. In addition, most home sellers prefer choosing a homebuyer that has a pre-approval letter. It tells the sellers about your ability to pay, improving your offer’s favorability.

So before you set out to find the house of your dreams, make sure to apply for a mortgage pre-approval.

3. Hire a professional mortgage broker

The housing market is becoming increasingly challenging and competitive for new home buyers. Therefore, it is essential to have a professional mortgage broker on your side.

For example, mortgage brokers assist home buyers throughout each step, from preparing their mortgage application to final paperwork till closing. A licensed expert can help you get the best deal and maximize your chances of loan approval.

Moreover, mortgage brokers can make it much easier to connect with the right mortgage lenders and secure a favorable mortgage deal.

Here are some of the top questions first-time buyers should ask the mortgage lender:

  • What types of home loans do you offer?
  • How much interest rate do you charge?
  • How long does the underwriting process usually take?
  • How much would be your monthly mortgage payment?
  • How much would be the down payment and closing costs?
  • How much time does it typically take for mortgage closing?

4. Know your mortgage options

Depending on your credit score, there are various mortgage options that can help you purchase your dream home within your financial capacity. For example, at PierPoint Mortgage, we offer a range of mortgage products, including:

  • USDA Loans
  • FHA Loans
  • VA Loans
  • Jumbo Loans
  • Conventional Loans

You can get a mortgage with a low credit score under some of these loan options. So, feel free to consult with our mortgage brokers in Denver to know your loan eligibility and select the right loan option that suits your needs the best.

5. Compare different loan offers

Don’t make the mistake of accepting the first offer you get. It is best to get a few different offers from various mortgage lenders and compare them to ensure you are getting the most beneficial deal on your mortgage.

However, don’t just look at the lowest interest rate and affordable closing costs. It is best to consult with your mortgage broker to narrow down your options and negotiate the best possible deal.

6. Set a Realistic Budget

Most new homebuyers tend to find a home depending on the maximum estimated loan amount they qualify for, overlooking the additional costs. However, there are many other expenses associated when selecting a house.

For example, there are closing costs, down payment, construction costs, potential repair costs, utility bills, etc. Thus, it is crucial to consider all types of costs when setting your mortgage budget.

Here are a few additional tips to help you set up a realistic budget:

  1. It is recommended to calculate your net income and ensure that the down payment on the mortgage should not exceed ⅓ of your income.
  2. You need to review and change your spending habits to stay within the budget.
  3. You should assess your cash reserves when preparing to buy a house to ensure you have enough money to cover the down payment and closing costs.

Our loan officers at PierPoint Mortgage can help you put together a realistic budget and help you get a fast mortgage to acquire homeownership of your desired property. Our team will help simplify the mortgage process and explain every step to help you make an informed decision. In addition, our loan officers are highly experienced in devising effective strategies to overcome all kinds of first-time home buyer challenges.

So, if you are ready to apply for a home loan, schedule a consultation with our mortgage professionals for expert assistance!

Simply fill out our online form or give us a call at 844-241-7720 to get started.

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PierPoint Mortgage, LLC, was founded in 2003 and have been offering brilliant services ever since. PierPoint Mortgage is a nationwide mortgage broker that has over 50 years of mortgage experience.

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