To handle a mortgage effectively when buying a house, follow these steps: First, obtain a mortgage pre-approval from a lender to understand your budget and strengthen your offer. Second, aim for a credit score of 740 or higher to secure the lowest interest rates. Third, save at least 20% for a down payment to avoid private mortgage insurance (PMI) and reduce long-term costs. Fourth, compare fixed-rate and adjustable-rate mortgages (ARMs) based on your financial stability and risk tolerance. Finally, review closing costs, which typically range from 2% to 5% of the loan amount, and budget for them separately.

The importance of these steps is supported by data. A FICO score above 740 qualifies for the best mortgage rates, with a 1% drop in interest rates for every 20-point increase in credit score (Federal Reserve, 2022). Pre-approval shortens homebuying timelines by an average of 17 days, according to the National Association of Realtors (NAR, 2023), and increases offer acceptance rates by 40%. A 20% down payment saves approximately $100 monthly on a $300,000 loan, avoiding PMI costs of $150–$250 monthly (Consumer Financial Protection Bureau, 2021). Fixed-rate mortgages remain preferable for 70% of borrowers due to interest rate stability, while ARMs offer initial savings of 1–2% for those with short-term plans (Mortgage Bankers Association, 2023). Closing costs vary geographically, with urban areas averaging $8,000–$12,000 (Bankrate, 2023). Proper mortgage planning saves buyers over $500,000 in interest over 30 years compared to high-risk loans (U.S. Department of Housing and Urban Development, 2022).