Tips for Getting Your First Mortgage

Buying your first home can be an exciting time, watching your hard-earned dollars afford you a place to call your own. On the other hand, it can also be tricky to understand how it all works, the process, and how you’ll afford it. Here are three tips to help prepare for your first mortgage.

1. Know What You Can Afford

Figuring out how much house you can afford doesn’t have to be complicated. A few simple calculations can give you a good idea of what your home mortgage budget should be, without stretching yourself too thin. This will also give you an idea of how much you might be approved to borrow. 

How to Calculate Your Debt-to-Income Ratio:

1. Add up your recurring monthly debt obligations, such as your credit card payments, student loan payments, car payments and rent payments.
2. Divide that number by your monthly pre-tax income.

Banks analyze your debt to determine your ability to repay your mortgage. It’s important to note that debt-to-income ratios don’t include your living expenses. So things like entertainment expenses, cell phone bills and groceries are not included in the calculation.

You can also use an online calculator like the one by Bankrate here. Once you know how much you can afford, you’ll be able to narrow down your home search.

2. Ask Questions

There are several things to understand about the mortgage process, like insurance and the different types of loans. Don’t be afraid to ask questions, especially if you start to feel overwhelmed. It’s important that you fully understand all the factors at play. After all, it’s likely the largest purchase you will ever make! The lending team at Ambler Savings Bank is here to guide you through the process and advise you on all the options available.

Some common questions:

• What types of mortgage loans are available?
• What is the annual percentage rate (APR)?
• What closing costs will I have to pay?
• How long will the loan closing process take?
• What costs or fees will I be required to pay prior to closing?

3. Have Your Financial Info Ready

When you come across the perfect home and are ready to make an offer, it’s important that all your financial info is on standby. Here are some common items you should have prepared:

• Pay Stubs/W2s – Pull the last year or two of W2s and three current consecutive pay stubs. If self-employed, you should have your last two tax returns with all schedules and a year-to-date profit and loss statement.
• Bank Statements - Two months of bank statements for checking and savings accounts
• Investment and Retirement Accounts - Two months of statements for investment and retirement accounts
• Gift Letters – If family or friends are helping you make the purchase, you’ll need a letter confirming the money is indeed a gift and not a loan.
• Renting History – For first-time home buyers, renting history to show you can pay on time may be requested.

Once you determine how much you can afford, understand the process and prepare your paperwork, you’ll be in the best position to make an offer.

The Ambler Savings Bank Lending Team is available to help with all your home mortgage needs from beginning to end. Visit our website to learn more or call our office at 215-646-8400 to speak to a lending professional today.