Advice for First-Time Home Buyers: Five Ways to Simplify the Mortgage Process

You’re preparing to buy your first home and you couldn’t be more excited… that is, until you start to think about acquiring your very first mortgage. Cue dismal, dreary music… dun, dun, duunnnn!

Relax! Buying your first home should be (and is) a very exciting time and the mortgage process does not have to be riddled with doom and gloom. Yes, your first home mortgage is probably the biggest purchase you’ve made thus far in your life, but a little preparation can make for smooth sailing on your way to closing.

Here are five tips to make your first mortgage process a stress-free experience:

1. Be in the Know About Your Dough

The first thing you can do to be prepared for the mortgage process is to understand your assets. Get to know your monthly cash flow – in and out. Do you consider yourself to be a big spender; so, when the end of the month comes, you just can’t wait for your next pay day? Or, do you have a surplus of money left each month?

Be familiar with how much money you have coming in and going out. Programs like Quicken and Microsoft Excel can help you track your spending each month and many banking institutions offer similar online programs that can help, too.

2. Give Credit Where Credit is Due

Not only should you know about all of the money that you have coming in and going out, you need to know about your credit score as well. You want to do everything you can to bump it up before buying your first home to help ensure a smooth mortgage process. How can you do that?

Check your credit report before you apply for your first mortgage. Then, you will know where you stand before your lending institution even takes a peek. In your credit report, look for any mistakes or unpaid accounts; and, that includes the account you forgot you ever opened when you were in college.

Keep in mind that lenders will consider not only the fact that you pay your credit card bills on time, but also the amount of credit that you are using, in relation to how much you have available. If your credit score needs a little bump, experts suggest beginning to work on it at least six months before you begin to search for your first home.

3. Take the Guesswork Out of the Process

Don’t wait to seek out a lender to tell you what you can and cannot afford. Of course, your lender may have the final say, but you don’t have to go into the process blindly. Once you become familiar with your finances, know what kind of down payment you’re able to make on your first home and where you would like your monthly payment to be, you will easily be able to calculate a home price or range that you should be considering. Once you’re comfortable, by all means, take the next step; get preapproved by a lender and begin your search!

4. Keep Your Financial Ducks in a Row

Of course, by “ducks,” we mean financial documents. When you are ready to seek out a lender and apply for your first mortgage, it is helpful to know what that lender will need to see to get you approved as soon as possible.

Be prepared for any lending institution by having your two most recent paystubs and bank statements ready, along with the last two year’s W-2s and tax returns. With those already in hand, lenders may not even be able to tell that this is your first mortgage!

5. Give Yourself Time

As with pretty much any major decision you have to make, rushing into the mortgage process for your first home can be a big, stressful mistake. If you begin the home-buying process six months to a year before you ideally would like to close on your first home, you can ensure a less stressful process. The more months you give yourself to prepare, the more you can boost your financial situation, your credit rating and your savings.

Here’s to happy home buying! Who’s ready to start searching for their first home?