Buying your first house is a huge milestone, while it’s an exciting one, and you’re probably getting overwhelmed with the whole process. It can feel like it’s too much at first. When it comes to securing your first mortgage, there’s a lot to navigate, from understanding how much you can afford to thinking about lender requirements.
With the right steps and little planning, you can set yourself up for success. Here are some simple tips to help you to land that first mortgage with confidence.
1. Get to know what your options are. First time buyers often qualify for special loan programs such as FHA, VA or state sponsored assistance programs. But if you’re in the tech world or you receive a part of your income through stock compensation, you may want to explore RSU mortgages. Some lenders offer mortgage products that allow you to count your vested restricted stock units as part of your income. This boosts your borrowing power, especially when salary alone doesn’t reflect your total earnings. It’s a great option for first time buyers in high demand fields like software development or tech startups.
2. Think about your budget. Before you go ahead and fall in love with a dream house, take time to work out what your budget is and how much you can comfortably, affordably pay. It’s not just in the maintenance costs, but the actual mortgage cost and taxes. Don’t forget insurance on that calculator as well. You can use mortgage calculators to get a rough idea of what your payments may look like.
3. Get early pre approval. Mortgage pre-approval is like a financial green light. It tells sellers that you’re serious and shows how much a lender is willing to allow you to borrow based on your income, debt and credit score. Getting pre-approved early in the process can also help you to catch out any issues such as low credit scores or high debt. These are the things that could hurt your chances. When you fix these before you officially apply, you’ll have better rates and smoother processes.
4. Adjust your credit. Your credit score is one of the biggest factors in your mortgage approval and interest rate. If it’s on the lower end, work on paying down those debts so that you don’t end up with huge interest costs. At the same time, try to save as much as you can for a down payment. The more you put down, the less you have to pay back.
5. Work with a trusted broker. There’s never any shame in asking for help to navigate this process, especially as it’s the first time a good mortgage broker or adviser can walk you through everything that you need to know, explain to you your options and connect you with lenders that match your financial situation. First time buyers will often benefit from having someone on their side who knows the insurance and outs of the industry too, and this will save you time, money and stress.