From Piggy Bank to Property: Decoding Mortgages for First-Time Buyer

Thinking about buying your first home? You're not alone — and it’s more doable than you might think. If you're unsure where to begin or how financing works, this guide breaks it down in clear terms.

What Is a Mortgage?

A mortgage is a loan you use to buy a home. You borrow money from a lender, and in return, you agree to pay it back over time with interest. Your home acts as collateral, which means the lender can take it back if you don’t make payments.

Key Mortgage Terms to Know

• Principal: The amount of money you borrow.
• Interest: The cost of borrowing that money, shown as a percentage.
• Term: The length of time you’ll repay the loan — usually 15 or 30 years.
• Down Payment: The amount you pay upfront, typically between 3% and 20% of the home price.

Types of Mortgages

• Fixed-Rate Mortgage: Your interest rate stays the same for the life of the loan.
• Adjustable-Rate Mortgage (ARM): The rate may start low but can increase later.
• Government-Backed Loans: FHA, VA, and USDA loans can offer lower down payments and easier approval for qualifying buyers.

The Mortgage Process: Step-by-Step

1. Get Pre-Approved: Shows sellers you’re serious and helps define your budget.
2. Start House Hunting: Find the right home for your needs and budget.
3. Make an Offer: Work with your real estate agent to submit an offer.
4. Apply for Your Mortgage: Provide financial documents to your lender.
5. Home Appraisal and Inspection: Confirm the value and condition of the property.
6. Close on Your Home: Sign documents and officially become a homeowner.

Are You Ready to Buy a Home?

Before applying for a mortgage, consider:

• Can you afford the monthly payments?
• Are you planning to stay in the area for a while?
• Is your credit score strong enough for loan approval?

Buying a home is a big step, but it’s also a way to build long-term wealth and stability. With the right planning, it’s more achievable than many people realize.

Thinking about buying your first home? Reach out today to get pre-approved and learn what mortgage options work best for you.