Finding The Right Mortgage For You
Trying to find the right home to buy also means that you need to find the right mortgage strategy. The type of payment plan that you choose can have a major impact on your future. Not only can this plan vary for people of different income levels, it can also differ based on your age.
Young people who are looking for a new home may struggle to come up with a high down payment because they haven’t saved very much. People in middle age may have more savings but some of those savings will be marked for a retirement fund. Seniors who are looking for a home to spend their retirement years may be planning a budget that is based on a fixed income.
Follow the tips below to find the right mortgage for your stage of life as well as your budget.
New Home Buyers
Young people are buying houses at an increasing rate. Large numbers of millennials are reaching the age when they want to purchase their first home. They may encounter some unique obstacles along the way.
A typical down payment can range as high as 20%. On a standard suburban home, this can translate to a down payment in the tens of thousands of dollars. Of course, this will lead to lower monthly payments over a typical 30-year mortgage, but the down payment amount may be more than most young people have budgeted for.
A good solution is to ask for a lower down payment in exchange for higher monthly payments. It’s possible to get a mortgage with a down payment that is less than 10% of the total house cost. This will allow younger homebuyers to move into their first house without totally wiping out their savings. They’ll have to deal with higher monthly payments as a result but many young people will get promotions and pay increases as they continue in their careers. This can help offset the higher monthly cost.
Middle-Age Home Buyers
People encounter a lot of expenses in middle age. They may be saving for their retirement fund, paying for their kids’ activities and planning for family vacations. This might mean that they want to avoid a high monthly payment or an expensive down payment.
One solution to this problem is to search for rental properties that cost less than homes. After all, many homeowners will want to downgrade to a smaller property after their kids leave home. Finding an inexpensive home for rent will allow them enough room to raise their kids and enough freedom to find a less expensive home where they will spend their retirement years.
Retiree Home Buyers
Because many seniors are living on a fixed income as they enter retirement, they may not have enough free cash to deal with a high down payment or regular monthly payments. One option is to pursue a home equity loan. This will disburse loan payments based on the equity that they have built up by making regular mortgage payments over the years. Losing equity in their home might not be a bad thing, especially if they are looking to relocate to a smaller home for their retirement years.
This option will also generate extra cash that they can use to cover living expenses while saving up to move.
Choosing the right home buying plan isn’t always easy but making the right choice for your lifestyle can set you up for years of happy living.