Tying the knot

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Mortgage Options for First-Time Homebuyers

By Brandon Schleter

Perhaps you've seen the news stories recently about a coming interest rate hike, and you're wondering what this could mean for you and your finances. Maybe you've been thinking about buying your first house - for sale signs are showing up everywhere now that it's spring, right - but you're not sure where to start.

First, while the Fed has said the rate hike might not be a big as originally anticipated, taking advantage of low interest rates is a good strategy if you're ready to buy your first home. If you're not sure how much house you can afford, or whether or not your financial situation is right for such a major purchase, our team can sit down with you and help you create a plan.

Let's say you've decided it's time to take the leap into homeownership - now, where to look for a loan? The bank is a natural starting place for many to get a loan, and banks can provide a safe and reputable place to get a mortgage as well. If you are good loan candidate - you have good credit, consistent income and low debt - your bank will probably offer you a loan at a competitive rate. It can be more comfortable using your bank since you already have an established relationship with them. Here you don't have to be worried about the reputation of a mortgage broker or experience, and you get consistent outcomes as a result. However, there are sometimes disadvantages.

Banks sometimes aren't as flexible with their loan programs due to the recent credit crisis. I have seen people who make a consistent $200,000 per year, but because they're also carrying $500,000 in student loan debt, the bank denied a mortgage. I have also seen people who have just moved from another state, but even with high income and good credit, cannot get a loan through a bank because they haven't worked in the state long enough. Banks are more bureaucratic, and won't be able to be as flexible with providing a mortgage to young buyers.

This is where a mortgage broker can come in. A mortgage broker has several lenders to choose from when offering a mortgage, which can allow more flexibility to people in situations like the above examples, and sometimes better rates as well. It's important to get the best rate you can qualify for, as this can amount to a lot of savings down the line. Furthermore, mortgage brokers can do a lot of the tedious work that is often involved in getting a mortgage. They have processes in place that can streamline acceptances and the lending process, plus take care of a lot of the headaches that come with the paperwork.

That said, it's very important if you do choose to use a mortgage broker, to choose an experienced and reliable one from a reputable company. You want to be sure the mortgage broker has your best interest at heart and offers you the most affordable options. We at Family Financial work with a number of mortgage officers and can help point you in the right direction towards one. Call us today - we're always here to help.

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