Securing A Mortgage In Your 20s
Who says that 20-somethings don’t buy homes? While the trend is for young people to rent while their young, not everyone is willing to follow the trend. Buying a home can provide you with equity that you could never have imagined of securing at such a young age.
It’s also worth considering that this is the biggest financial purchase of your life. It will wrap you up in debt and tie you to a single location. That being said, it means you’ll be building equity, receive tax deductions, can improve your credit history, and will be building a home for you and your family.
So just how does a young-gun go about landing a favorable mortgage?
Mortgage Defined
A mortgage is simply a loan used to buy a home. The house will serve as collateral. Should the mortgage not be paid, the lender will recoup the funds they lent by repossessing your home. While it may sound scary, with the adequate financial planning this will never happen.
Mortgages are the chief way in which homeowners find the funds to purchase a home. A mortgage functions in a similar way to a credit card. The primary difference being the amount of money being loaned and the repercussions for multiple missed payments. To get approved for a loan you’ll need a SS number, recent pay stubs, documentation of all current debt, three months worth of bank-account statements, along with other proofs of assets.
In particular lenders will look to your credit score and history to gauge the likelihood that you’ll pay the loan back. Considering you’ve made very few substantial purchases, you’re financial trustworthiness is primarily generated through you ability to pay back your student loans. As is to be expected, the better your credit score, the lower the interest rate will be on a conventional mortgage loan.
The most pressing issue young homeowners face is gathering enough money for a down payment. The standard lender will ask that you pay 20% of the loan up front. This is not the case if you secure a VA loan for example, although must loans ask for a substantial down payment. Even if it’s not required it’s in your best interest to put significant money down.
Types of Mortgages
The two most popular types of mortgages are fixed-rate mortgages and adjustable-rate mortgages or ARMs. The former involves a fixed interest rate that won’t change throughout the duration of the loan. An ARM however will entail a fluctuating interest rate. All ARMs start off as fixed loans. Although this changes after a certain amount of years decided upon by your home lender. With an ARM you interest rate is tied to an index and will generally change every year. Some years you’ll pay little in interest while other years you can pay substantially more. While a fickle interest rate is scary, caps are placed on ARMs to ensure that they fluctuate out of control too quickly.
Wading into the waters of a home mortgage can be a daunting experience. Allow Affiliated Mortgage, the best mortgage company serving Fargo, ND to guide you through the process of securing a loan that’s right for you.
Securing A Mortgage In Your 20s
Who says that 20-somethings don’t buy homes? While the trend is for young people to rent while their young, not everyone is willing to follow the trend. Buying a home can provide you with equity that you could never have imagined of securing at such a young age.
It’s also worth considering that this is the biggest financial purchase of your life. It will wrap you up in debt and tie you to a single location. That being said, it means you’ll be building equity, receive tax deductions, can improve your credit history, and will be building a home for you and your family.
So just how does a young-gun go about landing a favorable mortgage?
Mortgage Defined
A mortgage is simply a loan used to buy a home. The house will serve as collateral. Should the mortgage not be paid, the lender will recoup the funds they lent by repossessing your home. While it may sound scary, with the adequate financial planning this will never happen.
Mortgages are the chief way in which homeowners find the funds to purchase a home. A mortgage functions in a similar way to a credit card. The primary difference being the amount of money being loaned and the repercussions for multiple missed payments. To get approved for a loan you’ll need a SS number, recent pay stubs, documentation of all current debt, three months worth of bank-account statements, along with other proofs of assets.
In particular lenders will look to your credit score and history to gauge the likelihood that you’ll pay the loan back. Considering you’ve made very few substantial purchases, you’re financial trustworthiness is primarily generated through you ability to pay back your student loans. As is to be expected, the better your credit score, the lower the interest rate will be on a conventional mortgage loan.
The most pressing issue young homeowners face is gathering enough money for a down payment. The standard lender will ask that you pay 20% of the loan up front. This is not the case if you secure a VA loan for example, although must loans ask for a substantial down payment. Even if it’s not required it’s in your best interest to put significant money down.
Types of Mortgages
The two most popular types of mortgages are fixed-rate mortgages and adjustable-rate mortgages or ARMs. The former involves a fixed interest rate that won’t change throughout the duration of the loan. An ARM however will entail a fluctuating interest rate. All ARMs start off as fixed loans. Although this changes after a certain amount of years decided upon by your home lender. With an ARM you interest rate is tied to an index and will generally change every year. Some years you’ll pay little in interest while other years you can pay substantially more. While a fickle interest rate is scary, caps are placed on ARMs to ensure that they fluctuate out of control too quickly.
Wading into the waters of a home mortgage can be a daunting experience. Allow Affiliated Mortgage, the best mortgage company serving Fargo, ND to guide you through the process of securing a loan that’s right for you.
© 2019 Affiliated Mortgage, LLC. NMLS #14211: AZ NMLS#0947858. All Rights Reserved. Affiliated Mortgage, LLC is a Division of Lend Smart Mortgage NMLS #4474
Developed and designed by https://blairallenagency.com
The post Securing A Mortgage In Your 20s appeared first on Affiliated Mortgage.
No comments:
Post a Comment