You’ve decided where you want to live, figured out how much you can afford to spend, and have started browsing real estate listings. Now, it’s time to secure your first home loan.

The benefits of mortgage preapproval

There are several important reasons why you should consider getting preapproved before you start shopping for homes:

• Know exactly how much home you can afford
• Make the home buying process less stressful, knowing that you won’t lose out on a home due to problems with financing
• Demonstrate your creditworthiness to the seller to improve the odds that they’ll accept your offer
• Speed up the process for faster closing

Understanding loan types

You will need to decide whether to get a conventional loan or one that’s backed by the government. A conventional loan will typically cost less but require a higher credit score, significant documentation, a specific debt-to-income ratio and often a minimum down payment. A government-insured loan will be more flexible but entail higher overall borrowing costs and you may not qualify for certain programs.

Both conventional and government-insured loans are available with fixed-rate or variable-rate terms. Each type comes with a distinct set of pros and cons:

• A fixed-rate mortgage can lock in a low-interest rate for the life of your loan, making it easier to budget and plan for the future
• A variable-rate mortgage can save you on interest payments for the first few years of your loan, making it easy to build equity faster

Prepare your credit

Your credit score can have a big impact on the interest rate your lender offers and the fees you’ll pay to originate your mortgage. It’s a good idea to have your credit report pulled well in advance to fix any issues that may negatively affect your score.

Understanding mortgage insurance

While it’s less common these days to save up a large down payment to purchase your first home than it used to be, it’s important to understand that buyers who put down less than 20% of the value of the home will need to purchase mortgage insurance. Mortgage insurance is a policy that protects your lender if you’re unable to make your payments. The good news is, as you build equity in your home over time, your mortgage insurance premium will go down–and once you reach 20%, you will no longer be required to pay.

Choosing the right lender

Shopping your loan around can get you a better interest rate, lower fees or more flexible loan options that better suit your financial situation. Working with a mortgage broker is a simple and effective strategy. An experienced broker can help you decide which type of loan will best suit your needs and then negotiate on your behalf with the best lenders for your unique situation.

To see if you qualify for a low rate, talk to one of our mortgage brokers today or click HERE for our 60 second digital pre-approval.

Want to see if you qualify for a lower rate? Take our FREE online pre-approval, and find out in just 60 seconds how much you could be saving!

• Secure, Fast, and Easy
• Does Not Affect Your Credit
• No Obligation