Securing Your First Mortgage

Are you ready to take the plunge into homeownership? Whether you're a couple ready to purchase a home, a same-sex couple who has married after years of partnership, or an individual who is tired of renting, the draw of putting down roots and owning property is often very alluring. But before you can proudly put out your welcome mat, you have to first find a great property you love and secure a mortgage. While it was once fairly easy to get financing for purchasing your first home, the housing market crash of 2008 has led to financers being a bit more cautious. They won't lend to just anyone now, so you need to be prepared for what's to come.

Where Do You Get Your Mortgage From?

The first step in securing your first mortgage is to know what your options are. Many people head straight to their bank for financing, but that might not be your best option. There are a number of different programs for first-time homebuyers, including special loans through the FHA and for military members and veterans. If you qualify for any of these programs, you may be able to get a reduced interest rate, make a very low down-payment, or otherwise save money.

If you don't qualify for one of these programs, do your research before you select a lender. Ask your friends and relatives who have purchased homes where they received their mortgage from. Some may have used a bank or credit union, while others might have gone through a mortgage broker. Typically, the best route to finding a great lender is asking the real estate agent who is helping you purchase the house. They have a wide network of contacts that they can suggest, who can help you get the right type of loan for your situation. Gather as much information about these and other options before you make a selection.

Consider the Market

Is it a buyer's market or seller's market? If interest rates have been steadily declining or holding steady at a low rate, it may be a great time to buy. If they're not, you want to be sure the rate you're quoted can be locked in. You may also be able to pay points to reduce your interest rate. This means you pay the lender a certain amount at closing in order to get a lower interest rate. Generally, a point is equal to one percent of the total mortgage amount, so paying these points can be expensive if you're borrowing a good amount of money. If rates are fairly low already, you may not need to worry about this.

Do the Math

Before you go in to meet with a lender to find out how much you can borrow, you'll want to take a look at your finances and decide what you can reasonably afford. Some lenders may say you're qualified for a larger mortgage than you can actually afford, although that's much rarer today than it once was. Still, you want to know your budget. If your mortgage payment is going to put you in financial stress every month, you may want to reconsider. Also take into account that your mortgage may include your property taxes, homeowners insurance, and some other costs. If it doesn't, you'll need to set aside money to pay these costs yourself.

What About a Down-Payment?

It may be possible to secure a mortgage without a down-payment, but that's not always the case. Making a down-payment does reduce the amount you have to borrow, but it also means having a good amount of money upfront. Usually, down-payments are 20 percent of the property's cost, but you may be able to find lenders willing to accept less.

Be Prepared

It won't do much good if you go to your lender without all of the information the lender needs to determine if you qualify for a mortgage. You might want to call ahead and ask what you need to bring so you're prepared. Generally, you'll need pay stubs, your most recent tax return, and other financial information.

Real Estate Agents Can Help

Not sure what you'll need to qualify for a mortgage? Your real estate agent can give you an idea of what to expect when you walk into a lender's office. While they're not necessarily mortgage experts, they do understand how the process works and will be able to answer some of the basic questions you might have.

For those in the LGBT community, working with a gay or lesbian real estate agent may also be a plus. These agents understand your particular needs when it comes to housing and financing, and they will do all they can to help you in your search. You'll find a list of LGBT agents in your area at www.GayRealEstate.com, a website specializing in LGBT real estate.