5 Things You Should Know Before You Get Your First Mortgage

Getting your first mortgage is exciting and overwhelming all at the same time. You have so much to look forward to, but there is also so much you need to know. You’ll have a few things to learn as well as a few things to check up on about yourself to make sure you are truly ready to buy a home.

1. Check Your Credit

Have you checked your credit? Do you know your credit score and/or credit history? If not, it’s time to find out. Your credit score is the first thing lenders look at when you apply for a mortgage. They want to know that you are financially responsible and that three-digit number tells them a lot. Look at your credit history too. Do you pay your bills on time, avoid overextending your credit, and have a decent mix of credit? Lenders look for all of these factors.

2. You Should Get Pre-Approved

Don’t shop for a mortgage without getting pre-approved. This simple letter lets you know how much money you can borrow as well as the maximum sales price you can afford. Don’t think you have to spend as much as the lender approves you for though – go ahead and use that number as guidance, but know what you are comfortable paying each month too.

3. You Don’t Need a 20% Down Payment

The 20% myth still follows homebuyers today, but it’s not true. You can get a mortgage with as little as 3% down. In fact, VA and USDA loans don’t require any money down and FHA loans allow you to accept 100% of your down payment as gift funds.There are even conventional loan programs with as little as 3% down. Don’t let the lack of down payment funds stop you from trying to get a mortgage. There may be a program out there for you allowing you to achieve the American Dream of buying a home.

4. Know the True Cost of Homeownership

Don’t think that the cost of homeownership stops at the mortgage payment – it doesn’t. Don’t forget about property taxes, homeowner’s insurance and home maintenance/repairs. On average, homeowners pay 1% of the home’s value in repairs and maintenance, but of course, you may spend a lot less or a lot more. Use that figure in your forecasting when deciding what you can comfortably afford.

5. Understand How the Term Affects You

Watch the loan’s term. You may jump at the 30-year term because of its low payments, but think about the bottom line. You’ll pay the most interest on the longest terms. What’s your goal? Will you be in the home in the long run? You may want to minimize your interest charges by opting for a shorter term, assuming you can afford it. If this is a short-term home, taking the smaller payments won’t affect you as much since you’ll pay the loan off long before the term ends.


Before you get your first mortgage, educate yourself. Know the terms, know what you can afford, and try to predict the future. Investing in a home is one of the largest purchases you’ll make so make sure you have a thorough understanding of the process before getting started and you’re sure to achieve success.  At Kagu Loans we can help you to achieve your goal.