Getting a loan as a first-time homeowner can be an overwhelming experience. Not only are there so many different types of loans to choose from, but the process of applying for a loan can also be confusing. If you’re a first-time homebuyer and you’re trying to figure out how to get a loan to finance your purchase, you’ve come to the right place. This article will walk you through the process of getting a home loans from Homespire or any other lender.
Steps to Get a Loan as a First-Time Homebuyer
Before starting the mortgage process, you need to know how much you can afford. You can use free mortgage calculators available online to assist you. Once you know how much you can afford, then you can begin your search for a mortgage.
Step 1: Find a Mortgage Broker.
To get a home loan as a first-time homebuyer, you need a mortgage broker. The broker will help you choose the right type of loan, help you find lenders who will approve you for the loan, and guide you through the application process. When searching for a mortgage broker, you need to make sure that they’re qualified and experienced. The best way to do this is to ask for referrals from friends and family or do your research by reading reviews online.
Step 2: Choose the Right Type of Loan.
When you’re a first-time homebuyer, you have four different types of loans to choose from:
- Fixed-rate mortgage – This type of loan will have a set interest rate, which means your monthly payments will stay the same over the life of the loan. This can be great if you’re trying to budget ahead. However, if interest rates go up, so will your payments.
- Adjustable-rate mortgage (ARM) – This type of loan has a set interest rate for a certain period of time, after which the rate will adjust every year. This can be good for you if you expect your income to increase. But if interest rates decrease, so will your payments.
- FHA loan – This type of loan is great for people who have lower credit scores; hence it’s quite popular. The interest rates of FHA loans are very low, even lower than conventional loans. They’re quite popular because they are partially insured by the government.
- VA loan – This loan is made for members of the military. It’s just as popular as FHA loans.
Once you’ve chosen a type of loan, you need to decide on a term. Your term is how long you’ll have to pay off the loan. Your options are:
- 15 years – This is the shortest term. It’s a great option for first-time homebuyers who want to pay off their mortgage quickly. As you can guess, it involves higher monthly payments.
- 20 years – This is a common term. It’s often the best option for first-time homebuyers who don’t want to pay for a 30-year mortgage.
- 30 years – This is the longest term. It’s usually the best option for people who want to keep their mortgage for the long term. It has the lowest monthly payments.
Step 3: Apply For a Loan.
Once you’ve chosen a lender, you can start applying for a loan. You’ll need to provide a lot of information, including your income, assets, debt, and employment history. You’ll also need to provide your tax returns and pay stubs to prove your income. You’ll also need to provide documentation of your assets and liabilities.
Step 4: Pre-Approval
Before you can start looking for a house, you need to get pre-approved. This means that you’ve already told your lender that you’re going to buy a house and that they’ve run all of the credit checks necessary to approve you for a loan. The lender will then write an approval letter and send it to you.
Once you have been pre-approved, you can start the hunt for your dream house. Start by visiting various realtors’ offices to see the listings on the market. Normally, you will find houses with different prices but you will have to stick to your budget since homes are expensive purchases that, as you have seen above, take years to pay off. Once you have narrowed down your choice of house, you can then proceed to make a bid on it. Although the process of getting a home loan can seem daunting, we hope that the steps listed above can help ease your work.