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Tips for first-time mortgage borrowers

Looking for your first home — and a mortgage to go with it — can be overwhelming. The numbers alone are staggering when the most expensive thing you've ever bought is a Honda Civic. But there's nothing to fear if you go into the process prepared, says Tom Gleason, executive director of MassHousing.

"It's not the great mystery that many people make it out to be. But that doesn't mean you can just go in blindly and people are going to throw money at you to buy a home," Gleason says.

Here are some tips for first-time buyers looking for a loan:

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Get educated

"This is going to be the biggest investment you'll probably ever make," Gleason says. "If you would do research buying a car or buying a computer, why wouldn't you do research to buy a home? So go get better educated about what you're buying. I think that's critical."

Nearly all MassHousing borrowers are required to take a first-time home buyer's class to qualify for the program's low-down-payment mortgages, and Gleason says the effect is unmistakable: The agency's delinquency rate (3.25 percent for the last quarter of 2014) is better than the statewide figure for more conventional loans (3.76 percent for prime, fixed-rate mortgages). What about Federal Housing Administration loans? The number climbs to 11.73 percent.

"We don't care how you get educated, but we care that you do get educated, " he says. "And going through these classes, we've seen over time, makes a big, big difference."

Pay your bills

"Pay attention to how you're managing your credit," he says. "If you're delinquent on store credit or student loans or car credit, you've got to take care of those issues." If not, "You're just going to get rejected," he says.

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"People who have credit scores below 680 or maybe 660 are going to have a more difficult time getting a mortgage," Gleason says.

Be sensible

"You have to be realistic about the price of the home you can buy. Nothing creates more stress in a family than being overextended on your home and not being sure whether you can make the mortgage payments," Gleason says.

Shop around

Ruth Bazinet of East Taunton was preapproved twice through a local credit union during her yearlong home search, but in the end she used the broker her real estate agent recommended. She was glad she did.

"The numbers she ran for me . . . were all like $200 or $300 a month less on average," Bazinet says.

Look for low-down-payment options

Excellent credit and a stable income hold more sway than a big down payment in today's mortgage market, and there are many first-time buyer programs to look into, Gleason says. Even Fannie Mae and Freddie Mac are buying mortgages that require only 3 percent down.

"I think the Fannie and Freddie programs will get a little more traction as we go through the year. The FHA also reduced their mortgage insurance premium by a half percent, and I think that will help people that are looking for mortgages," Gleason says.

Trust the process

Gathering and submitting pay stubs, tax returns, and even letters from bosses or bank managers can be pure drudgery at best and demeaning at worst.

"It was definitely a hassle," home buyer Matthew Edwards says of the mortgage approval process. "We had a lot of phone calls [from the mortgage broker]. It was like every other day for two or three months."

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There's a reason lenders want to see all this: They need to be sure you can make those payments, month after month, year after year — for their sake, and yours.

"I think that a lot of it was helpful," says Edwards's wife, Caitlin, "because I feel like our mortgage is as high as it should be for us."


— J.G.