Buying a home for the first time is an exciting prospect. While it’s a major investment, having a place to call your own is a dream of many people. When it comes to getting your first mortgage, the more information you have, the better. This guide explains a few of the basics so you can go into the process with your eyes open. 

3 Tips When Applying for Your First Mortgage

1. Set Your Budget Before Home Shopping

Being realistic about your financial standing gives you the best chance of being approved. In addition to your monthly mortgage payment, you’ll need to factor in closing costs (which can be from 2% to 5% of the total amount of your loan), home repairs or remodeling, moving expenses, and additional fees. Keep in mind that if your down payment is less than 20% of the total purchase price of the home, you’ll also need mortgage insurance.

2. Get Preapproved

Some housing markets are quite competitive. When you’re preapproved by a lender, meaning you’re guaranteed to receive a certain loan amount when buying a home, it can put you ahead of other home buyers. For example, if you’re in close contention with another person for a home and you’re preapproved, it provides the seller peace of mind. That means your offer is more likely to be accepted. 

3. Check Your Credit Score

Your credit history plays a substantial role in the loan approval process. The better your credit, the more likely you’ll be approved with favorable loan terms. A minimum score of 620 is required for conventional loans, but you can secure a Federal Housing Authority loan with a credit score between 500 and 580, depending on the amount of your down payment. If your credit score is beneath the minimum, take some time to boost your credit by paying down debt and making all payments on time. 

Finding the right lender is equally important as the above tips. In Byhalia, MS, Citizens Bank is beloved by clients for their personalized service. They provide variable and fixed rate loans, and can help you find the best loan product for your needs. They also offer refinancing loans to existing homeowners, which can help make mortgage payments more manageable. Visit them online for more information, or call (662) 838-2146 to schedule an appointment with a loan officer.