Young, first time home buyers, interested in affordable mortgage options, will need to have a game plan to obtain affordable mortgage rates.
Purchasing your first home as a young person can be quite intimidating and sometimes even challenging. There’s a limited, yet comprehensive pool of financing options.
Mortgage Tips for First Time Buyers
Pay Off Debt: It is important to save funds. if you want to purchase a home. Focus on paying off as much debt as possible, before applying for a mortgage loan. Use any spending cash to pay off credit card debt, college loans, and other consumer debts that are common to first time home buyers. Paying off your debt will also help attract investors, which translates to better interest rates. Mortgage investors will be very wary in funding a mortgage. if your monthly debt payments exceed 40% of your gross income.
Limit Liabilities and Credit Inquiries
If you are planning to purchase a home in the near future, do not apply for a slew of credit cards or a new car. Many credit applications will do a “hard” credit check that can lower your score, resulting in spiked interest rates.
Finding the right options for young mortgage seekers will require careful planning, especially since many young home buyers do not have enough established credit to secure a mortgage loan at a reasonable interest rate.
Mortgage Options for People with Low Credit Scores
In the U.S., Federal Housing Administration mortgage loans work for first time home buyers who do not have strong credit scores. FHA is a federal government agency that guarantees a mortgage loan through private lenders. This can be especially helpful for young home buyers who do not have a comprehensive credit score. Since the mortgage loan is handled by the government, investors are willing to extend loans at reasonable interest rates.
There are also a number of federal loans for first time home buyers. The VA Loan is a loan granted to veterans who have been honorably discharged. There are many requirements, but the loan has attractive rates and terms, especially if this is the first house the borrower has purchased.