The time has come and you’re ready to make the switch from renting to owning your very own home. Becoming a homeowner is an exciting event, but for first-time homeowners, it can feel intimidating. Perhaps wondering how much to save up for a down payment has you overwhelmed. Or maybe your not-so-great credit score has you wondering how you’ll ever apply for a mortgage. The good thing is there are many different ways to buy your first home and they don’t have to be challenging. With several programs and options available, getting your first mortgage for a new home is easily attainable.
Researching Your First Mortgage Options
When it comes to buying a home, there are a lot of mortgage options available. At BrightPath, we’re here to help you review various options until you find the right first mortgage to perfectly suit your needs.
One of the first steps of getting your first mortgage is researching your options. A few popular options include:
Government-backed mortgages include mortgages secured by the Federal Housing Administration (FHA), the U.S. Department of Agriculture, and the U.S. Department of Veterans Affairs. This category of mortgages gets its name from the fact the mortgages are secured by the government which means if you default, these organizations cover the loss for the mortgage companies. Because of this, mortgage lenders usually have more generous approval terms so they’re great for first-time home buyers or those with lower credit scores.
A fixed-rate mortgage means it has the same interest rate during the lifetime of the loan. Many of the government-backed loans tend to be fixed-rate mortgages. You can also get conventional and conforming loans that come with fixed rates. Conventional loans are those not backed by the government while conforming loans meet the specific guidelines set by Fannie Mae and Freddie Mac.
Adjustable Rate Mortgages
Adjustable rate mortgages start out with an introductory rate which changes after a certain amount of time has passed. These loans are best if you believe the interest rate will go down at the adjustment period or you plan to move before the rate adjusts.
While conforming loans meet specific guidelines set by Fannie Mae and Freddie Mac, a jumbo mortgage is the opposite. This type of mortgage doesn’t meet the debt-to-income guidelines. This loan is flexible and is great if the value of your home is over a certain threshold.
A self-employed loan, or Income Express loan, is the perfect option for you if you’re getting your first mortgage and are self-employed or a small business owner. Self-employed loans make the mortgage process simple when it comes to the lack of a traditional income.
Getting Approved for Your First Mortgage
To get pre-approved for your first mortgage, you want to start by providing your lender with information about your credit score, income, employment situation, debt, and any other financial details. It’s also important to let your lender know if you have any savings for a down payment. This information allows your lender to determine how much money you can afford to borrow.
When it’s time to move from the pre-approval stage to the approval phase, you need to verify all information. During this time, your lender may want to see additional details such as a few months of bank account statements.
After your information is verified, you want to move from pre-approval to approval as quickly as possible. Before that can happen, you want to talk to your lender about the terms of the loan. Take into account the length. While most mortgages are 15-year or 30-year terms, there are a few exceptions so it’s always good to talk to your lender about the right loan for you.
At BrightPath, our goal is to make the transition into getting your first mortgage as easy and seamless as possible. We have a wide range of mortgage options available to help you find the best fit for your finances. Visit our website today or call us at 888-222-6003 to learn more about our different first mortgage options.