Are you buying your first house? Here are some tips for applying for a mortgage.

Buying your first home is a very exciting stage in life, and walking through that front door for the first time is a memory that you will cherish forever. However, all of the details of applying for your first mortgage can sometimes be overwhelming and confusing.

Here are some things that you should know when you are applying for a mortgage for the first time:

Shop Around

You don’t have to go with the first mortgage lender who you speak to! It’s worth shopping around to find the best interest rate, as well as looking at other factors such as closing costs, payments schedules and other restrictions. Remember that you are committing to this mortgage for many years so you will want to make sure that the payment plan works for you and your lifestyle.

Check Your Credit Score

Having a good credit rating is very important in getting your mortgage application approved, so make sure that you know what your credit score is before you apply.

Some lenders will not approve your mortgage if your score is under a certain amount, so you might need to work on improving it before you buy a house. You can use a credit-reporting bureau to obtain a copy of your own credit score and go through the report to make sure that there are no issues or errors that you need to deal with first.

Gather the Documents

When you are applying for a mortgage, the lender will ask you for several important documents, so why not work on gathering these together before you apply? You will most likely need to bring pay stubs, bank statements, tax returns, and other documents. Check with your individual lender to find out in advance what they need you to supply.

Only Buy What You Can Really Afford

When you are applying for a mortgage and determining what price range of house you can afford, keep in mind that your lender might try to encourage you to buy the biggest home you can afford.

It’s important to remember that you don’t need to borrow the maximum amount. It’s much more sensible to go for a mortgage that you can comfortably afford, so that you will have some wiggle room if your job situation changes or you have future unexpected expenses.

The Shorter the Better

If you have a choice between a shorter or longer mortgage, always go for the shorter one if you can. The shorter the term of your mortgage, the less you will pay overall due to interest rates. The monthly payments might be a bit less on a 30 year mortgage, but you will end up paying thousands more in interest over the years. Always useful to talk and ask with a banking expert to go through a mortgage calculator in order to compare both options, and then choose!

These are just a few things to remember when buying your first home and applying for a mortgage for the first time. Good luck and happy home buying!