For many people who haven't dealt with them in the past, mortgages and similar loans feel like the kinds of things only older adults deal with. Many people in their 20s simply don't think they're anywhere close to having the money it takes to own a home, and we often don't even consider this as a realistic option until later in life.
At Altius Mortgage and our partners at Mortgage Ogden, we're here to tell you that this isn't the case at all. We've helped numerous buyers in their 20s get a head start on one of the biggest financial commitments they'll make in their lives, including finding fantastic mortgage rates and great programs for first-time buyers. What are some of the factors you should be considering and prioritizing if you're looking to own a home at a younger age?
Where do I want to live for the long-term? In some cases, people in this age range avoid buying a home in part because their life isn't yet at a point where they're comfortable settling down in a given city or state. If you're going to get a mortgage at this age, you should be confident that you're in an area you plan to be in for a while. Consider city and even town or neighborhood factors for your possible search areas well in advance.
Is my credit score high enough? Younger people have had less time to build up a credit reputation than older adults, and this could mean your credit score is lower. At the same time, if you've been active with your credit for a few years, you could be in very good shape. Any score above 660 or so is generally good enough to get into most strong mortgage programs, while scores under 600 are a concern.
Do I have enough saved up for a down payment? We'll go over down payments a bit more below, and they're a vital factor. Most first-time buyers spend at least a year or two saving up for a down payment, so you have to be doing some advanced planning here.
Pre-approval is a process where you submit your financial information to a lender, who can assess it and give you an idea of the ranges of mortgages you can afford. Pre-approval factors include financial and property documents, along with personal documents and basic proof of identity. You can often use pre-approval letters to strengthen your buying position, as many sellers consider them valuable in the process. Make sure you have all your important items collected and up-to-date so you can get pre-approved and speed the process along.
For many first-time buyers, the down payment is very intimidating. But unlike what you might have heard, you don't necessarily have to have 20 percent down available to get a great home – there are several programs that might allow you to come up with far less. Still, you should plan at least a year or two in advance to be saving up for this sum; even if you get great down payment assistance, this will still be the largest single lump sum you pay during the process.
For more on what you should be thinking about if you're attempting home ownership as a younger adult, or to learn about any of our mortgage loan services, speak to the pros at Altius Mortgage today.