How to Get a Home Loan in Your 20's

You're probably on your 20s, and you're already considering getting a house. Maybe you're staying in a rental only eats up a huge chunk of your paycheck, or you’re with your parents to save up for your mortgage down payment. Unless your parents are wealthy, buying a house straight out wouldn't be possible. So, How do you get a loan at your age?

Home loan providers will probably check your credit history and your credit score, which can be a problem for those people who only have information on their credit history. It is where you'll need your student loan debt.

Having a better credit score would ensure that your interest rates will be lower. That's why it's important that you know how to handle your student loan debt to make sure that you'll have a good credit score history.

Another qualifier that you do need to focus on is the down payment. Lenders would initially ask you to pay at least 20 percent of the total loanable amount. You may be able to qualify for a smaller down payment. However, your mortgage provider would mandate you to avail the private mortgage insurance to cover any possible risk of default. It would only ensure the mortgage provider which only adds up to your monthly home loan statement.

The question that you need to ask yourself is if this is the right time for you to buy a house. You have to contemplate on a lot of things to come up with a decision. You have to consider certain things such as your monthly income, your priorities and even you plans to make sure that you are making the right choice. It would also determine which mortgage type would be best for you.

An adjustable- rate mortgage gives you a much smaller monthly payments for the first few years of the loan. However, this will increase as soon the mortgage interest rate resets. So if you are planning to pay the house for more than a decade, then the ARM would probably not fit your lifestyle.

A fixed- rate mortgage's interest rate stays the same throughout the loan's term. This is quite ideal for borrowers who wants to have a much more stable monthly payment. Although debt is significantly higher than the ARM, a fixed- rate mortgage gives the borrower a chance to budget their income much easier. Most real estate experts would often tell their clients to think about their decisions better. Keep in mind that getting a house is considered to be one of the biggest purchase that an average person can do, so you have to know if you are making the right choice.