Mortgage Q&A: What First-Time Homebuyers Need to Know

Buying your first home is an exciting achievement but can also be overwhelming. At Drake Bank, we try to make the process easier by giving you the information you need and guiding you step by step through the process. To help with your homebuying journey, our mortgage specialist Stephanie Scarrella has answered some of the most frequently asked questions.

1. What factors should people take into account before purchasing a home?

Begin by looking at your budget, not just the purchase price, but also the monthly payment you can afford and your plans for the down payment. You should also consider the location and how long you intend to remain in the house, and make sure your budget includes room for maintenance, planned projects, and unforeseen expenses.

2. What kind of mortgage should a first-time homebuyer take out?

No mortgage is suitable for all people; conventional mortgages, FHA mortgages, VA mortgages, and first-time buyer options each have their own advantages. By taking your income, credit rating, down payment, and personal goals into account, we can compare the options and find the most appropriate one for you.

3. What happens during the mortgage process, and what can homebuyers expect from application to closing?

The process usually starts with pre-approval and then involves completing the application once you’ve located a house. We will check your income, assets, and credit record, arrange for an appraisal, carry out the underwriting, and get the loan ready for closing. Our team will outline all the stages from beginning to end, step by step.

4. What are some mistakes that first-time homebuyers should avoid?

Shopping around before getting pre-approved, focusing only on the interest rate, making too many credit inquiries, stretching the budget, and making major financial changes—such as opening a new credit line or changing jobs—during the loan application process. These things can impact your approval for purchasing a home.

5. What misconceptions do homebuyers, particularly those who are buying their first home, have regarding mortgages?

A common misconception is that you need 20% down or perfect credit to buy a home. Many buyers qualify with significantly less down, and there are programs specifically designed to make homeownership more accessible. Some programs require as little as 3% down.

6. What advice would you give buyers to help them feel prepared during the loan application process?

Make sure your income, assets, and employment details are easily available, respond quickly when your lender makes a request, and avoid making any major financial changes without first consulting your mortgage team.

7. What kinds of ongoing home-related expenses should be considered?

In addition to the mortgage payment, plan for property taxes, homeowners’ insurance, utilities, maintenance, repairs, and, when applicable, the HOA fees. Since these costs can change each year, it is important to prepare properly.

8. What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?

A fixed-rate mortgage keeps the same interest for the life of the loan, providing predictable principal-and-interest payments. An adjustable-rate mortgage typically offers a fixed rate for an initial period, after which the rate can adjust based on the terms of the loan.

Stephanie and her team are here to answer your questions and guide you through every step of the mortgage process. Reach out today to learn more or get started with pre-approval so you can shop with confidence.