Buying your first home is one of the most exciting times of your life if you do it the right way. Decreasing the amount of stress and frustration during this time can make a huge difference in how you feel about your home. Your home should be a place where you feel comfortable and at peace. If you make critical mistakes when purchasing your first home, it can create unnecessary anxiety and unhappiness during and after the process. Let us take a very close look at six mortgage tips for young first time home buyers.
1. Provide credit report
To start things off, you will want to provide your credit report to the mortgage company. This shows your credibility as a borrower and can set you up for better rates. As a young adult, you might not have much to show on your credit report, but don’t worry too much. Just the fact that you are willing to share a credit report goes a long way. The mortgage company will likely ask for it eventually, but go ahead and provide it yourself. If you can, it is best to start working on your credit score as soon as you are able to and ready for that responsibility. It will greatly benefit you down the road as you make larger purchases for your family.
2. Consult mortgage brokers
Next in line, consult mortgage brokers the moment you start looking for a home. These brokers are experienced professionals who are ready to guide you through every step of the process. They truly want to help you secure the best mortgage possible. Once you provide them with a history of your purchases and living arrangements, they can get started on your mortgage search. Every month, update the broker with what types of homes you have in mind and how far along you are in the process. Give them important features that you are looking for in your future home.
3. Increase down payment
Yet another great mortgage tip is to increase your down payment. At first glance, the down payment might not seem like a big deal because you can always rely on a larger loan. However, it is in your best interest to maximize the down payment. You will have less to pay off later when you might be facing financial stress or trouble. It is a larger commitment at the moment but one that is well worth it in the end. Save your future self from difficult finances by increasing your down payment. The sooner you start saving and planning for your home, the better. Consider putting money into a separate account that is specifically for your dream home. This way, when the right house comes along, you will be ready for it.
4. Be realistic
It is your first home, and you are likely very excited. However, it is important to be realistic about your expectations. It is unrealistic to purchase a massive home as a young adult and expect to maintain a career and a family all at the same time. Some individuals are ready for this, and that’s great. But there’s no shame in having a smaller home especially if you have a smaller family that doesn’t require that much space. If you’re realistic and smart with your money right now, you will be setting yourself up for more success in the future.
5. Do some research
Research is also crucial to success. Buying a home is nothing like renting an apartment. You will likely need a significant mortgage, and you need to do your research in this regard. Don’t just settle on the first mortgage that crosses your path. Research the best brokers and companies to work with and find a mortgage that is right for you. Once you find something that looks appealing, cross-check your impression with professionals online. Look for first-hand testimonials by other homeowners. You will be able to compare the mortgage at hand with the best ones on the market.
6. Check prepayment penalties
Last but not least, check whether the mortgage has prepayment penalties. You might have enough funds to pay off the mortgage early, but you don’t want to face a penalty for doing so. A mortgage without a prepayment penalty allows for more flexibility overall. If you are in a decent financial spot, a prepayment might be a good goal to have. At the same time, such a penalty can keep you in check for the greater good. Just keep it in the back of your mind.
When all is said and done, these are some useful mortgage tips for young first time home buyers. Mortgages are there to help you get through the financial process. Make the most of your mortgage and your home!