9 Tips for First-Time Homebuyers Seeking a Mortgage Loan


Choosing to buy a home is one of life’s biggest financial decisions — one that, overall, should be marked by excitement and anticipation. But especially for inexperienced first-time homebuyers, the process can also be a confusing and complicated one that, at times, can even be intimidating.

With the right approach and the right people on your side, though, a first-time home purchase can be one of life’s most rewarding and memorable experiences. (And over the long term, the decision can even rank among life’s most profitable ones.) 

If you’re thinking about making your first home purchase in the near future, consider making these nine expert-recommended moves before applying for your first mortgage:

  • It’s a big commitment, so make sure you’re ready — The average mortgage loan involves a considerable amount of money and has a term lasting for 15 to 30 years, making it a serious and lengthy commitment for borrowers who sign up for one. And while many homebuyers will move out of and/or sell their homes before the loan term is up, anyone taking out a mortgage loan should ensure that he or she is ready for such a big commitment. To help avoid potential financial troubles, homebuyers should have a stable income, have enough savings to cover at least three months of expenses (including the monthly mortgage payment), and plan to commit to living in the home they’re buying and the city it’s located in for at least five years.
  • Check your credit, and boost it if you can — Lenders look at both credit scores and credit reports when deciding whether to lend to prospective borrowers — and both can have a significant impact on the interest rate a borrower is eligible to receive.
    A range of tactics can help you raise and maintain your credit score, including paying bills on time, paying down credit card balances and asking for/receiving higher credit limits. Further, consumers are entitled, by law, to receive a free copy of their credit report once a year from each of the three national credit bureaus (Equifax, Experian and TransUnion). At the very least, all prospective homebuyers should review a copy of their credit report for accuracy, then work to correct any errors they may find.
  • Identify your must-haves, nice-to-haves and don’t-wants — The various features and characteristics of any property you’re looking to purchase will contribute to its value. And for each individual homebuyer, certain features and characteristics will be more important than others. A good way to start your search is by identifying the areas of town you’re interested in and the type of home (apartment, single-family, townhome, etc.) you’d like to own. From there, make a list of the critical features and characteristics you must have in the home you’re seeking (such as size, number of bedrooms, number of bathrooms, fenced yard, etc.), along with the features and characteristics you’d like to have and the ones you definitely don’t want. This list will help you narrow down the pool of candidates when you’re searching through the homes for sale in your target area.
  • Set a budget you’re comfortable with, and stick to it — The amount of money a prospective homebuyer is approved to borrow from a lender can often exceed the size of loan he or she is actually comfortable taking out. Before committing to a home purchase, be sure to carefully review your income, your expenses and your other financial details to determine how much you actually feel comfortable about spending each month on a mortgage payment. Once you have that figure, use it to determine the ceiling on how expensive a home you can afford. And once you’ve set your budget, stick to it to ensure that you don’t stretch yourself too financially thin.
  • Save up for a down payment — For many potential homebuyers, one of the biggest hurdles to home ownership is the down payment — the cash a buyer must have in hand to pay the seller up front during the purchase process. The minimum down payment amount will typically be a certain percentage of the full sales price, and to cover it, anyone interested in buying a home should start setting money aside early. Further, by making as large a down payment as possible, homebuyers can reduce the amount of their loan and, over time, the amount of interest they’ll pay over the term of the loan.
  • Look into your options for a low down payment — A number of federal programs are available to help prospective homebuyers who can only afford a small down payment — and some of them can even, in certain cases, bring the down payment down to zero. Before getting a loan, prospective homebuyers should be sure to check to see if they are eligible to get an FHA loan, a USDA loan or a VA loan, some of the top options available to U.S. consumers for low down payments. Other options for lowering your down payment include city and state programs for first-time homebuyers, some of which offer down-payment assistance and/or will cover a portion of qualified buyers’ closing costs. 
  • Work with a real estate agent — While a home shopper can seek out and buy a home without professional help, going it alone is not advisable — especially for first-time homebuyers. Getting a good real estate agent can deliver a range of benefits to the homebuyer, including deep local knowledge and expertise, a wealth of experience with the homebuying process, help with negotiations and contracts, an array of area connections, and more. And because the seller is responsible for paying the real estate commission when a home is sold, there is little downside to enlisting a real estate agent for the buyer.
  • Get preapproved before making an offer — Getting a mortgage preapproval — a letter from a lender stating how much money a potential homebuyer is allowed to borrow — can bring a range of benefits for the buyer during the home-shopping process. Among them, it can help the homebuyer set a budget, show sellers that any offer made is serious and can be backed up, and cut the risks of any surprises and unexpected delays later in the homebuying process. Further, getting a preapproval is free of charge with most lenders, and it’s typically a quick and easy process for the potential homebuyer.
  • Hire a reputable inspector — A good home inspector can assist the buyer in identifying any potential safety issues or costly problems with a home before the purchase is made — which can help the buyer avoid inheriting expensive repairs and other headaches once the home is his or hers. Based on the results of an inspection, the buyer can also decide to back out of a purchase or renegotiate with the seller to factor repair expenses into the purchase price. And overall, a quality home inspection can help ensure the buyer that he or she is getting a safe, well-maintained property that is worth the purchase price.

At The Southern Bank, we pride ourselves on offering friendly, personalized service to all of our customers — and that includes providing guidance when you have questions about any of our banking services. To learn more about our Personal Banking services ranging from Mortgages to Personal Checking, Personal Loans, Savings & Money Market, Certificates of Deposit (CDs) and more, check out the Personal Banking page on our website, or visit one of our local branches for friendly, in-person service with a smile.