Buying a house is hardly simple for anyone. However, exploring the process can pose some challenges, particularly for a buyer at age 18, who relies on his or her income to qualify for a home. The truth of the matter is that it is not impossible to accomplish this goal at age 18.
The scope of this article will cover the benefits of buying a house rather than renting and tips to getting a mortgage at age 18.
🏬The upsides of buying a home at age 18
Below are some benefits associated with buying a home at age 18.
You are at liberty and owe no one any obligation. Being your own home, you will be motivated to carry out some motivations in it. Examples are changing the bathroom tile or fixing a leaked roof. Besides, you are not restricted to rear your choice pets like dogs, cats or alligator. Apparently, any improvement made on your house will increase its value. You may ordinarily lack the zeal to make these improvements in a rented home.
💹You get Value for your Home
When you decide to sell your house, you get return on investment which you could not have gotten as a tenant.
🏥No Need for a Mortgage Payment
Unlike renting, which involves you writing a check monthly, your mortgage can be paid off entirely.
Alternatively, you can buy your next home with the equity and finally pay that one off. Early investment will fast track the process.
In most cases, the money made from home sale is tax free. Besides, deduction of mortgage interest and property taxes reduce your annual tax liability.
As earlier mentioned, buying a home age 18 is quite possible although it may be a daunting task as a young adult. Your finances may not be in perfect shape as you are just getting it started. However, you need not worry about this. You can get a mortgage even as a young home buyer by using the tips below as a guide.
i. Good credit score
In today’s tough lending environment, a good credit record is highly important as a factor for mortgage approval. For the best interest rate, target a credit score which is not less than 740. Although, you may get a loan approval with a lower credit score, you will pay higher interest rate on your mortgage loan.
You will position yourself for a mortgage if you have a solid down payment. Target nothing less than 20% of the loan price for the lowest mortgage rates. Assuming you are unable to pay the whole 20% upfront, you may be qualified to take other form of loans other than the conventional mortgage which allows smaller down payment. The downsides of these other loans (not the conventional mortgage) are higher interest rates and miscellaneous fees in addition to the loan.
🏘What is the Value of my Home?
iii. Stable income and employment history
Lenders will scrutinize your financial picture (employment and income history) prior to your mortgage approval. A stable and growing income is an indication that you can keep up with future payment.
iv. Debt to income ratio
Debt to income ratio is a factor which determines the pre-approved amount for your mortgage. It is essential you have as little debt as possible so as to get approval for the largest mortgage possible.
v. Don’t take things for granted
Paying attention to details prior and throughout the mortgage process is very important. You are to maintain a high credit score and avoid missing a payment.
It is also essential to be patient while filling out your long and detailed mortgage application form. With this, you will avoid wasting precious time going back and forth correcting small errors, underwriting and supplying necessary information which may be requested as a result of these errors.
As a young adult, getting your first mortgage is not all that easy. However, you need not worry about it. Ensure your finances are well prepared before applying. Thereafter, wait for bank’s decision.
vi. Consider FHA loans
As a young adult at age 18, you may want to consider FHA loans.
These loans offer lower interest rates as well as lower credit scores as a requirement. First time buyers and those who have not owned a house for three years are qualified to make a very low down payment which is 31/2% of the purchase price. However, these loans require documentation and underwriting.
vii. Plan for the future
In the course of your home search, have you considered what happens if you find a partner? What if you have to relocate possibly for a greener pasture? Don’t you think these are possible? Of course, they are.
However, when any circumstance which may change your plan from using your home as primary residence occurs, turn your home into an investment.
Home ownership is a big investment which brings a lifestyle change. It is highly essential to be financially prepared and do your homework. Buying a house at 18 is certainly feasible and there are varieties of affordable options to consider. However, the transition from a rental to homeowner is more complicated if you go through the process alone. Regan Laughlin, a highly experienced and competent real estate agent can help you walk through the process. She and her team at RL Real Estate Group can give you complete peace of mind and do everything for you. Contact the experts at RL Real Estate Group now, at 605-212-8431 or at firstname.lastname@example.org. Texts are welcomed. They will be more than happy to be of service to you.