First-time Homebuyer’s Guide: Follow These Steps to Get Your First MortgageBuying your fi rst home is both exhilarating and overwhelming.

Stay on top of it all with this step-by-step guide on what to expect

when you're trying to get a mortgage.

If you're a fi rst-time homebuyer, you're probably excited — and a bit overwhelmed — at the prospect of shopping for a new home. There are a lot of details involved in this process, including applying for and obtaining a mortgage, and it's a lot to take in. This fi rst-time homebuyer’s guide to getting a mortgage will guide you through the steps and help ease the way.

1. Check (& fi x) your credit

In reviewing your mortgage application, your lender will be most interested in your personal credit. The fi rst thing you should do before applying for a mortgage is obtain a copy of your credit report.

You can obtain a free copy of your credit report once a year from each major credit reporting agency (Equifax, Experian and TransUnion) by visiting AnnualCreditReport.com. Simply click the Request Yours Now! button at the top of the home page.

page 1

https://cadencebank.com

https://cadencebank.com

Once you receive your credit report, do the following:

• Review all the information carefully, starting with your personally identifi able information like your name, address and Social Security number. If there are any errors, contact the credit reporting agency directly to get them corrected before you apply for a mortgage.

• Review all of the loans and accounts listed on the report to make sure they are accurate. Again, if you see any errors, contact the agency directly to begin the correction process. Get everything fi xed before you apply for a mortgage.

To contact the credit bureaus:

• Equifax Credit Information Services, LLC. P.O. Box 740241, Atlanta, GA 30374; to dispute credit report items, call 866-349-5186

• Experian National Consumer Assistance Center. P.O. Box 4500, Allen, TX 75013; to dispute credit report items, call 800-509-8495

• TransUnion Consumer Relations. P.O. Box 2000, Chester, PA 19016-2000; to dispute credit report items, call 800-916-8800

If you have accounts in collection: It's vital you make arrangements to pay o� those delinquent debts and/or try to negotiate a settlement with your creditors. Call the individual company to whom you owe the money to make payment arrangements. Then, make sure that the payo� is properly refl ected on your credit report. It will be di� cult to get a home loan at a favorable rate if you have delinquent debt.

page 2

2. Know your debt-to-income ratio & pay down debt

Your lender will also examine your personal debt-to-income ratio, which is the proportion of debt you owe compared to your gross monthly income. Lenders prefer to see a low debt-to-income ratio because it means you are more likely to be able to meet your monthly debt payments, including a mortgage payment.

Therefore, you should concentrate on paying o� as much of your debt as you can. The less debt you have, the lower your debt-to-income ratio will be, which could increase your chances of obtaining a mortgage. If you have any credit card debt, start with this, paying down one credit card at a time. Then focus on paying down other consumer debt like car notes or other types of personal loans.

page 3

https://cadencebank.com

For help paying down your debt, try:

• The Snowball Method. In this popular method from fi nancial expert Dave Ramsey, you pay o� your debts from smallest balance fi rst to largest balance last.

• The Debt Avalanche Method. Also known as the "highest interest method," this is another popular plan in which you pay o� your debts from highest interest rate to lowest interest rate.

• Cadence Bank Credit Card Calculator. Use this calculator to see how di� erent debt payment options would a� ect your total interest paid and the number of months it would take you to pay o� your balance.

3. Determine your down payment

Next, determine how much money you can apply toward a down payment on your new home. The more money you can put down, the lower your total mortgage and monthly payments will be. Your bank may require a minimum down payment, anywhere from 3 percent to 20 percent, depending on such factors as your income and your credit score. This Down Payment Comparison Calculator will help you compare di� erent down payment options.

If coming up with a down payment is preventing you from moving forward in the home-buying process, you may wish to search for any down payment assistance programs you may qualify for in your state. Taking advantage of these, however, limits the types of loans and homes you can get. And keep in mind that if you put down less than 20 percent of the home's price, the lender will likely ask you to pay private mortgage insurance (PMI).

page 4

https://cadencebank.com

4. Start gathering these documents

After receiving your loan estimate, you will be asked to provide a wide range of fi nancial documents as you prepare your mortgage application. These typically include the following:

Copies of your most recent pay stubs, generally covering the past monthof employment

The names and addresses of your employer(s) over the past two years

W-2 forms for the past two years (if you are an employee)

1099 forms or profi t and loss statements for the past two years (if you owna business or are self-employed)

Tax returns for the past two years

Bank account, brokerage and credit card statements

Statements for any other current debt, such as car or student loans,refl ecting the minimum monthly payments and balances due

page 5

https://cadencebank.com

•

•

•

•

•

•

•

Two important things to note:

1. These documents aren't required at the time you apply for the loan; they are required after you receive your loan estimate.

2. Try not to buy anything on credit or apply for a new credit while your mortgage application is pending.

5. Talk to a mortgage professional

Once you've completed all the above, it's time to fi nd a lender and submit your loan application. While it's important to compare rates from several lenders, don't just automatically go for the lowest rate without doing some additional research. You should ask potential lenders:

• How much experience do you and your team have?

• What does your application process look like?

page 6

https://cadencebank.com

• How much support do you give me through the process?

• Are there any costs involved beyond the principal and interest payments?

Once you choose a lender, meet with the loan o� cer to review the di� erent mortgage options available to you. As you go into this meeting, you should know that all mortgages fall into one of two categories: fi xed-rate mortgages and adjustable-rate mortgages (also referred to as ARMs).

• In a fi xed-rate mortgage, the interest rate remains the same for the entire term of the loan. Mortgage loan terms are usually 10, 15, 20 or 30 years — in other words, this is the length of time you will make payments until you own your home free and clear.

• In an adjustable-rate mortgage, your interest rate will fl uctuate based on current market rates after an initial fi xed-rate period. Deciding whether a fi xed-rate mortgage or an ARM is better for you depends on two main factors:

page 7

https://cadencebank.com

1

2

Your risk tolerance. A fi xed-rate mortgage eliminates interest rate risk because the rate stays the same over the entire loan term. You’ll never have to worry about your mortgage payment rising if interest rates rise — but your payment will never go down if interest rates fall.

Your home ownership time frame. If you plan to be in the home for a short period of time, such as three to fi ve years, you could benefi t from an ARM that locks in the initial rate for this period of time (initial ARM rates are usually lower than fi xed mortgage rates). However, if you plan to be in the home long-term and want to keep your mortgage payments consistent over time, you're probably better o� with a fi xed-rate mortgage.

Ask about special mortgage programs

In addition to fi xed-rate mortgages and ARMs, many lenders also o� er a variety of home-buying programs, including programs geared toward fi rst-time homebuyers and low- and moderate-income borrowers.

FHA, VA, Fannie Mae, Freddie Mac and Cadence Bank all o� er these types of loans. These mortgages require lower down payments and credit scores than traditional home mortgages. Di� erent geographic areas have di� erent standards to defi ne low- to moderate-income borrowers, so you should talk to your lender about whether you might qualify for one of these mortgages.

Once your loan application is approved, ask your lender for a pre-approval letter that you can present to the home seller. This will help reassure the seller that you’ve been pre-approved for a mortgage and the sale process can move forward.

page 8

https://cadencebank.com

For additional help

The road to your fi rst home loan is complicated, but when you break it down step by step, it's more than doable. Cadence Bank can help.

For help determining the a� ordability of a new home, use our Home Loan A� ordability Calculator. It shows you:

• The maximum monthly payment you can a� ord• The maximum loan amount you can a� ord• The interest rate necessary to make the loan a� ordable• The loan payo� period

If you'd like more information or have additional questions about our A� ordable Home Mortgage product, please contact us. You can also fi nd a Cadence Bank mortgage professional near you.

page 9

https://cadencebank.com

This e-book is provided as a free service to you and is for generalinformational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the e-book. The e-book is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes. Cadence Bank does not provide legal, accounting or tax advice to any client who receives services from Cadence Bank.

NMLS#525022