Tips on navigating the mortgage process

Let’s be frank: It’s not easy to get a home mortgage. Nor is it impossible. In fact, millions of people apply for and obtain a new mortgage every year.

If you want to get a mortgage but you’re anxious about the process, you might want to start with online research and self-education.

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Online is where most people begin, according to research from the National Association of Realtors, or NAR. Researching online can help you get comfortable with the process and find professionals to contact.

Eventually, you’ll have to reach out to a live person to move forward. As Ken Pozek, a realtor with Keller Williams Realty in Northville, Michigan, says, “You can’t figure out everything using an app.

“Until you talk to someone who’s very knowledgeable, you might forget to ask about private mortgage (insurance), homeowner association dues — there are so many little idiosyncrasies. It’s the mortgage professional’s job to walk you through that,” Pozek says.

Realtor, lender teamwork

Typically, you’ll need to choose a lender before you can start seriously shopping for a home, though it’s fine to contact a realtor first to get a referral to a lender, says Jay Dacey, a mortgage broker for Metropolitan Financial Mortgage Co. in Minneapolis.

“Unless you’re a cash buyer, you’re going to need to get a mortgage,” Dacey says. “A good realtor is going to want you to get preapproved before they put you in their car and take you out driving and showing you houses.”

Realtors want to help buyers get started with the mortgage process, says Amy Butterworth, associate broker at Gibson Sotheby’s International Realty in Boston.

“We make sure we’re involved in the mortgage process as well, so if buyers are putting in an offer on a property, (we know) they’re ready to go from the finance standpoint as well,” she says.

The 20 percent down payment myth

Fearful first-timers need to let go of two common misconceptions about getting a mortgage, Dacey suggests.

The first is that you’ll have to save at least 20 percent of a home’s purchase price for your down payment.

In fact, if your credit score is acceptable, you can get a conventional home loan with a down payment of just 5 percent, and the entire amount can be a gift from a family member, Dacey explains.

An FHA loan insured by the Federal Housing Administration requires just 3.5 percent down.

A July 2013 NAR survey of 8,767 homebuyers and sellers found that nearly 90 percent of buyers financed their purchase.

The median down payment for first-timers was 5 percent.

Not everyone qualifies for help

The second misconception is that first-time buyers are automatically entitled to tap some sort of broad generic first-time homebuyer program.

Assistance programs do exist, but each is unique, and many are restricted to certain geographic areas, Dacey explains.