Buying your first home? Whew! There are a lot of big decisions to make. After you browse property listings, review your budget, and gather all the paperwork, you’ll also spend plenty of time talking with lenders.
A great lender can help you understand your options and identify programs that fit your situation. There are plenty of options out there, so it’s natural if you’re initially confused about costs or requirements. But don’t sweat it. Bring these questions to your first meeting with a lender to get the lay of the land before you go shopping.
1. What Types Of Home Loans Do I Qualify For?
First-time buyers sometimes assume a mortgage is a mortgage. In reality, there are several different kinds of home loans, and each type of mortgage has unique requirements and advantages. Depending on your financial situation (and the details of the property!), you may qualify for:
- Conventional loans
- FHA loans
- VA loans
- USDA Rural Development loans
- First-time homebuyer programs
Ask your lender to review your income, credit, savings, and homeownership goals to talk you through these options and pick out the one that makes the most sense for you. You might uncover opportunities you didn't know existed!
2. Are There Really Home Loans With No Down Payment?
Saving for a down payment is one of the biggest obstacles for first-time buyers.
Some borrowers may qualify for home loans with no down payment, including certain VA and USDA loan programs. Other buyers may qualify for programs that require a lot less cash upfront.
Every program has its own eligibility requirements, so if you’re short on savings for the down payment, it's worth asking whether these options will work for you and considering if any drawbacks might make it worth waiting and saving. But don’t just assume a large down payment is always required.
3. How Much House Can I Comfortably Afford?
Many buyers focus on how much they can borrow. A better question is how much they should borrow.
Your lender can help estimate monthly payments based on many factors: your income, existing obligations, taxes, insurance, and other housing costs. You’ve got to get all those numbers crunched to see a more realistic picture of homeownership costs month after month than a basic loan calculator (but a calculator is a great place to start!).
And remember: Just because a lender approves a certain amount doesn't mean that's the right fit for your budget and lifestyle.
4. What Will My Monthly Payment Include?
A full mortgage payment will generally include payments towards:
- The principal balance
- Interest
- Property taxes
- Homeowners insurance
- Mortgage insurance (when applicable for lower down payments)
This peek behind the curtain might help prevent budget surprises after closing. While you’re on the topic, it’s also a good time to discuss your savings strategy. Homeownership comes with plenty of ongoing expenses outside of the monthly mortgage payment itself (heat, water, electric, internet, maintenance and upkeep costs, repairs when a critical system like the boiler breaks down, etc.), so it’s important to keep up with emergency savings even after you've purchased a home.
5. What Credit Score Do I Need?
Along with your income and cash on hand, credit history rounds out the three most important factors in mortgage approval and interest rates.
If your credit score isn't quite where it needs to be, ask what improvements would make the biggest difference.
Sometimes relatively small changes can improve borrowing options or lower long-term costs.
Security State Bank Wyoming customers can also use Credit Sense through digital banking to monitor their score, track changes, and better understand the factors impacting their credit profile.
6. What Should I Expect For Closing Costs?
Closing costs catch plenty of first-time buyers off guard. Ask your lender for an estimate of:
- Lender fees
- Title fees
- Escrow costs
- Recording fees
- Prepaid taxes and insurance
Get the total of all these expenses ahead of time — they can be a lot when added together, and talk with your realtor to get clarity on whether you or the seller will be responsible for some or all of those costs. It’ll be easier to set a budget for your home search if you plan ahead.
7. How Long Will The Loan Process Take?
First, ask how long preapproval typically takes (prequalification is a separate, quicker process that happens first). Get clarity on the documentation you’ll need and what steps of loan approval, if any, could potentially delay closing.
In competitive housing markets, sellers often prefer buyers who can move quickly, so it’s always best to clear the way and get preapproval before you make an offer.
8. What Happens After I Build Equity?
Your first mortgage may not be the last lending decision you'll make as a homeowner. As equity grows — equity is the money the home is worth above and beyond what you still owe on the mortgage — homeowners sometimes explore ways they can use that value to fund renovations, major purchases, or other projects.
This is a good opportunity to learn the difference between a home equity loan and a HELOC.
A home equity loan provides a lump sum with fixed payments. You’re essentially borrowing additional money in your current mortgage to use some of the equity you’ve built up since the initial purchase.
A Home Equity Line of Credit (HELOC) works more like a revolving line of credit that allows you to borrow as needed, up to an approved limit, rather than in a lump sum.
You may not need either product today, but keep your future options open! It’s good to know the opportunity is there if you need it.
9. Can I Lock My Interest Rate?
Mortgage rates can change between preapproval and closing.
Ask your lender whether you can lock your rate, how long a rate lock lasts, and whether there are any fees involved. You should also ask what happens if rates drop after you lock. Take extra care if you’re buying during a period of volatile/changing interest rates or if your home search may take several weeks or months.
There are also options for mortgages with fixed interest rates throughout the life of the loan after your purchase, and also mortgages with variable interest rates, which may go up or down depending on the condition of the broader economy. Most people opt for fixed rates, which aren’t always the lowest option, but are the most certain and therefore the safest.
10. What Could Prevent My Loan From Being Approved?
Many buyers assume that once they're preapproved, everything is set. In reality, certain financial changes during the home-buying process can create problems. Ask your lender what actions could impact your approval between now and closing, such as:
- Opening new credit accounts
- Financing a vehicle
- Missing payments
- Making large unexplained deposits
- Changing jobs without discussing it with your lender
Ask up front so you know what to avoid and your mortgage application stays on track when you're close to the finish line.
Start The Conversation Before You Start House Hunting
It’s much better to ask questions before you find the perfect house.
Meet with a lender early so you have time to understand loan options, improve your credit if necessary, and build a realistic budget for homeownership.
At Security State Bank Wyoming, home loans are our bread and butter. Our experienced team works with first-time buyers throughout Wyoming to navigate options and guide you confidently through the buying process. Reach out to your local branch and we’ll walk you through everything you need to prepare.
