Previous | Charitable Giving; A donor-advised fund offers tax benefits Next | Soft landings require skill; Is the Fed instrument-rated?
January 25, 2023 / David Kuhns
Mortgage tips for first time home buyers

Mortgage tips for first time home buyers

Buying a home for the first time is one of the most meaningful experiences in your life. But finding the home is just one step in the process. Applying for and acquiring a mortgage is another key step toward owning a home. The following tips will help you prepare for the process. 

 

Save for a down payment

A sizable down payment can help you qualify for a lower mortgage interest rate. It can also help you reduce your monthly payments. Research state and local government agencies to see what first-time homebuyer assistance is available. You can save for your down payment by living below your means, transferring tax refunds into a savings account, setting aside work bonuses, creating and staying within a monthly spending budget, and setting up an automatic savings plan.

animation of people looking at financial data

Review your credit

Your credit history is one of the major factors that lenders will evaluate when deciding to offer you a home loan, and at what interest rate. Look at your free credit reports from each of the major credit bureaus: Experian, Equifax, and TransUnion. These reports and your credit score provide a snapshot of your creditworthiness and how you manage debt. If your score isn’t where you want it to be, you’ll discover which aspects of your credit need improvement so you can make the appropriate changes, such as clearing any past delinquencies and paying down high balances. It’s also important to keep paying your bills on time each month.

Get Preapproved

Once you decide that you’re ready to move forward, it’s time to seek a preapproval letter – sometimes called prequalification – from a lender. This helps to show that you’re a serious buyer and gives you a benchmark idea of how much home you can afford. To get preapproved, visit a lender in person, call, or go online. You will need to provide your basic income and financial information, and they will do a credit check. The lender will give you an estimate of the loan amount and the interest rate for which you qualify.

Organize documents

To prepare for both the preapproval and mortgage application processes, you should organize your documents in advance. Some of the documents that lenders might ask you for include:

  • Tax returns for the last two years
  • W-2s for the last two years
  • Bank statements
  • Social Security Number(s) – The lender can require anyone on the loan to provide a Social Security Number which can be used to pull your credit history.
  • Proof of employment – You must provide pay stubs and a list of jobs for at least the last two years.

 

Manage your mortgage

Your mortgage payment is one of your most important bills. With every monthly payment, you are one step closer to owning your home, free and clear. On-time payments also can improve your credit score. It’s a good idea as a first-time homebuyer to set up automatic mortgage payments with your bank. If you are unable to set up automatic payments, you might want to set up automatic payment reminders. And if for some reason you are unable to make a payment, contact your lender immediately.

 

David Kuhns is Residential Mortgage Manager for F&M Trust.

Recent Articles
Soft landings require skill; Is the Fed instrument-rated?
Soft landings require skill; Is the Fed instrument-rated?

Soft landings require skill; Is the Fed instrument-rated?

April 21, 2023 / Warren Hurt

50/30/20 rule helps with budgeting
50/30/20 rule helps with budgeting

50/30/20 rule helps with budgeting

April 13, 2023 / Courtney Shauf

What is Inflation?
What is Inflation?

What is Inflation?

April 07, 2023 / Joel Huffer

With recession possible, should I review my portfolio?
With recession possible, should I review my portfolio?

With recession possible, should I review my portfolio?

April 03, 2023 / The Merrill Anderson Company

Required Minimum Distributions in 2023
Required Minimum Distributions in 2023

Required Minimum Distributions in 2023

March 20, 2023 / The Merrill Anderson Company

First time home buyer assistance through First Front Door
First time home buyer assistance through First Front Door

First time home buyer assistance through First Front Door

March 17, 2023 / David Kuhns

How to avoid a phishing attack
How to avoid a phishing attack

How to avoid a phishing attack

March 14, 2023 / Ray Wills

Business owners can succeed with a personal touch
Business owners can succeed with a personal touch

Business owners can succeed with a personal touch

March 07, 2023 / Natasha Koons

Are you ready to be an entrepreneur?
Are you ready to be an entrepreneur?

Are you ready to be an entrepreneur?

February 24, 2023 / Patti Murray

Join our e-newsletter

Sign up for our e-newsletter to get new content each month.

NOTICE: YOU ARE LEAVING F&M TRUST!

You are now leaving the F&M Trust website. Links to third-party sites are provided for your convenience. Such sites are not within our control and may not follow the same privacy, security or accessibility standards as ours. F&M Trust neither endorses nor guarantees offerings of the third-party providers, nor is F&M Trust responsible for the security, content or availability of third-party sites, their partners or advertisers.