The Young Adult’s Guide to Home Mortgages
Buying a new home can be an overwhelming process at any age. For young adults, who are just starting to build their financial management skills, applying for and paying home mortgage loans can be particularly complex. The age at which people usually get home mortgage loans has increased over the years, which means young adults may have even more than questions than in the past, because they have fewer peers going through the process. However, mortgages are accessible to young adults, and it is still possible to become a homeowner in your 20s. If you are considering applying for a home mortgage loan, here is what you need to know.
Pay Attention to Your Down Payment
Having a down payment of 20% is standard for a conventional home mortgage loan. If you don’t have that amount of money, there are alternatives, such as using a lower down payment but carrying mortgage insurance until the equity in your home is equal to 20%. However, it is usually a good idea to come as close to 20% as possible, even if your lender is willing to give you a loan with less. A strong down payment will help you get the best interest rate on your loan and keep your monthly payment under control.
Manage Your Debt
One mistake that many young adults make is using financing to make purchases excessively. Although financing large purchases can make the cost manageable, it also leaves you with a lot of debt. Mortgage lenders look at your whole financial picture, including how much debt you already carry, so keep yours in check if your goal is to buy a home.
Consider the Full Cost of Home Ownership
Your home mortgage loan payment is just part of the cost of being a homeowner. When you are deciding what kind of payment you can afford, keep in mind that you will also need to pay for insurance, maintenance, landscaping, and home repairs, so you can budget effectively.
If you’re looking for a home mortgage loan in O’Fallon, contact GCS Credit Union. Our team members can walk you through the process and help you get the right loan for your budget. To schedule an appointment at our credit union, please call (618) 797-7993.