4 Tips to Get a First Mortgage

1. Get your credit in order

When applying for a home loan, your credit score has a big impact. So borrowers should do everything they can to boost their credit score before they apply for a mortgage. Paying down credit cards, paying your bills on time, and checking your credit report for mistakes are just some of the ways you can work to improve your credit score.

If you are thinking about buying a home in the near future, before you start house hunting or get pre-approved for a loan, it’s a good idea to check your credit report and find out what your credit score is. You are entitled to a free credit report once a year from each of the three credit bureaus – Equifax, TransUnion, and Experian, which you can access at www.annualcreditreport.com.

2. Know your down payment options

Coming up with a down payment can be the one of the biggest obstacles for first-time homebuyers. It can be challenging to save for a down payment, even if you have a steady income and decent credit score. But with the right planning and budgeting, you can reach your savings goals faster than you think. If you aren’t able to make a sizable down payment, another option is to use gift funds from a relative. As long as the borrower has 5% of their own money, gift funds can be used for the rest of the down payment. It’s also a good idea to talk to your lender to see if you qualify for down-payment assistance. Knowing what your options are and how much you will need to save before you start the process will help prevent any surprises along the way.

3. Get a cosigner

If your credit isn’t quite good enough to qualify for a mortgage on your own, you can ask someone with good credit, like a parent or relative, to cosign your loan. The cosigner should be someone with good credit and enough income to cover your payments if you default on the mortgage loan. It’s important to seriously consider the potential risks and consequences associated with this option. If you decide to use a cosigner and you end up defaulting on the loan, it may seriously damage your relationship with the cosigner.

4. Organize your documents

There are a lot of documents and paperwork involved in the home buying process. Knowing what documents you need and where to find them can save you a lot of time and make the process a lot easier. Take a look at our mortgage checklist to see what documents you will need so you can start collecting and organizing them.