Mortgage advice for first-time homebuyers

Family unpacking in new home and looking at tablet

While buying your first home is an exciting experience, there’s a lot you need to consider. From finding an experienced loan officer to preparing your documentation, these first-time homebuyer tips can help you confidently navigate the process.

  1. Educate yourself

The homebuying process doesn’t have to be daunting if you embrace learning about the journey. Start preparing yourself by reviewing the advice for first-time homebuyers in Guild’s First-Time Homebuyers Loan Guide.

  1. Find an experienced loan officer

You’ll need a seasoned realtor and a trusted loan officer to guide you through every step. Look for a mortgage loan officer with experience in the type of loan you are considering. The Consumer Financial Protection Bureau recommends talking to your personal network about how they chose their mortgage lender, then exploring your options with multiple lenders. “You get more information about your options and get a sense for which loan officers you might feel most comfortable working with.”1

  1. Get pre-approved

Pre-approval for a mortgage loan typically costs you nothing but gives you a goal of which homes are in your affordability range, as well as how much money you should save for a down payment. Having a pre-approval letter helps limit your home search to homes within your means, and can make your offer and negotiations easier. A pre-approval letter also shows a seller that you’re serious about buying a home. Without this letter, you could lose out on your dream home, since many sellers require a pre-approval letter with your bid.

  1. Determine your down payment

Lower borrowing costs can be one advantage of a larger down payment. But a substantial down payment can also deplete your emergency savings fund or leave you with no cash on hand for maintenance. You may have heard that it’s a requirement to save twenty percent before you can buy. This is a myth; there are a variety of mortgage programs that include low or no down payment options. Choose the best loan and the down payment amount based on your financial situation.

  1. Research homebuyer down payment programs

Saving for a down payment is often one of the hardest steps in the homebuying process, but it doesn’t have to be. There are down payment assistance (DPA) programs designed for first-time homebuyers with incomes below area median levels. They offer relief from the costs of purchasing a home for buyers who can afford monthly mortgage payments but don’t have enough money for a down payment. Eligibility is most commonly based on income. However, that can vary depending on the property location.

  1. Compare types of mortgage loans

There is no “best” type of mortgage loan because no two first-time homebuyers are alike. Instead of looking for the best loan, choose the loan most suited to meet your best interests. This guide will explain eight basic types of loans and help you choose the right one for you.

  1. Ask about first-time homebuyer programs

When researching lenders, ask what affordable lending programs they offer for first-time homebuyers who need a boost. For example, 3-2-1 Home is an exclusive first-time homebuyer program offered by Guild Mortgage, enabling home purchases with as little as 3% down. As part of the program, Guild provides a $2,000 The Home Depot Gift Card® and a $1,500 grant toward closing.*

*Guild Mortgage is not affiliated with The Home Depot. The Home Depot is not a sponsor of this promotion. The Home Depot is a registered trademark of Home Depot Product Authority, LLC. All rights reserved. Not available in Nevada. For eligibility and full terms and conditions, visit www.guildmortgage.com/321home/

  1. Check your credit report

Mistakes on your credit report can cost you when you apply for a loan. Before you get pre-approved, review your report for inaccuracies. To correct them, contact the business that issued the account or the credit reporting company that issued the report.2

  1. Prepare your documentation

The exact documents needed to apply for a new home loan will vary by lender and type of loan. However, there are items every mortgage applicant must supply, such as proof of income for the past two years and the sales contract. Check out this list of what to bring for your loan application.

Are you looking for more advice or wondering how to avoid first-time homebuyer mistakes? Find your local loan officer.

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply.

1 Exploring loan choices: Contact multiple lenders – Consumer Financial Protection Bureau

2 What should I look for when I review my credit report? – AnnualCreditReport.com