First-time homebuyers: A guide to mortgages

by Judy Gibbons 05/17/2023

What to know about mortgages as a first-time homebuyer  featured image

If you’re a first-time homebuyer, you may find yourself in need of a mortgage loan. Over 60 percent of homeowners have a mortgage, so becoming familiar with the loan process can be beneficial to your homebuying journey. 

What is a mortgage? 

A mortgage is a legal agreement between a borrower and a lender where the borrower, once approved for a set amount, pays back the lender over a specified term.  

Most mortgage loan terms range from 10 to 30 years, with the 30-year term being the most popular as it often comes with lower monthly payments. However, it’s good to note, the longer you take to pay off the loan, the more money you’ll pay in interest over the lifespan of the loan. 

Get ready for preapproval 

Getting preapproved for a mortgage loan is a great first step, as it allows you to see if you qualify. It also can give you a good idea of the financing you’ll have to work with to purchase a home. During the preapproval process, your lender will collect your financial information to see if you meet their borrowing requirements.  

You’ll most likely will need to provide W-2s, tax return info, your credit score and a few other items for preapproval verification. 

What is a mortgage composed of? 

A mortgage loan is made up of 4 primary components that include the principal, tax, insurance and interest. 

The principal amount is the amount of funds still left to pay off the loan, whereas interest is the fee your lender charges for taking out their loan. 

Your mortgage provider may also collect property taxes on your behalf through your monthly mortgage payment to be used annually. If you put down less than 20 percent on your home’s down payment, your loan provider may require you to pay for mortgage insurance to protect them if you default on the loan. 

Owning a home and paying for a mortgage is a significant commitment, so consider speaking with a lending officer. They can help you explore your options, get a better understanding of the process and find the right loan for your next home purchase.

About the Author

Judy Gibbons

As a Top Producer in Chicagoland for 19 years, Gibbons wanted to share her love of SW Michigan with her clients and friends and now is dually licensed in Michigan and Illinois. Gibbons leverages the global power of Sotheby's International Realty alongside her proven local knowledge to consistently provide all her clients a world class experience. Gibbons has a deep understanding of marketing and the business of real estate. Gibbons has over 28,000 followers on social media and believes in leading with the giving hand. As Past President of Women’s Council of Realtor’s Chicago, NAR committee member, and Green realtor, Judy loves nothing more to give back to the communities which have given her so much! Judy and her husband fell in love in and with Harbor Country 20 years ago! They purchased a home in Lakeside 5 years ago and created a successful Airbnb in Lakeside. The Gibbons crew of 5 children and 2 grandchild love to spend time at Dunedin Cottage too. Judy is ready to help you with all your Harbor Country real estate needs.  

Designations/Licenses: Certified Distressed Property Expert, Broker, GREEN 

Town Coverage: Chicago, Illinois, Arlington Heights, Illinois, Barrington, Illinois, North Barrington, Illinois