The Basics of Home Loans for Beginners, and Ways You Can Save Money

Sean Deminski, Realtor®
Sean Deminski, Realtor®
Published on July 3, 2018

If you are buying your first home, it’s important to do your homework to understand how the process works. More than likely, you are buying your home with the help of a home loan. Here are some basics of home loans for beginners, along with ways you can save money.

Get pre-approved

Before starting your home search, you should talk with a lender to go through the process to get pre-approved for a loan. While a pre-approval is not a guarantee of a loan, it does evaluate your eligibility and also give you an idea of how much house you can afford.

Keep up your credit score

While having a good income and large down payment are the main factors in getting a mortgage, a factor that is equally if not more important is your credit score. The higher your credit score is, the better chance you have of qualifying for a home loan and getting a lower rate. Getting the lowest interest rate possible on your home loan is important to save money. Because home loans have such long terms, even a quarter point difference in the rate can mean saving thousands of dollars over the life of the loan.

Utilize programs

Many homeowners fail to consider government-back loan programs for which they qualify. For example, if you served in the military, you can use veteran benefits to get a VA home loan. With a VA loan, there’s no money down, and even closing costs can be rolled into the loan balance. This allows you to purchase a home with virtually no out-of-pocket cost. Additionally, first-time buyers may be eligible for an FHA loan. There also are loan programs targeted at people who buy in low-income or rural areas. It can pay to check out these programs.

Ways to save money

In addition to a good credit score and government programs, there are other ways to save money on your loan and pay it off quickly. Ensuring you make the minimum payment necessary to avoid mortgage insurance is one way. Another is to pay discount points, which are upfront cash payments that lower your interest rate. You also can save money on your home loan by getting a shorter term. For example, a 15-year mortgage usually has an interest rate that is about a half point less than a 30-year mortgage. Keep in mind, though, that a shorter loan term will mean a much higher monthly payment.


Buying a home for the first time is both exciting and scary. That’s why it’s critical to do your homework and also take advantage of any programs and other methods that can get you the best deal. If you’re a first-time home buyer and you have questions about the process, please feel free to call Homesmart Realty Advisors today!


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