5 Tips for Setting Up Your Mortgage at an Early Age

Buying a home may seem out of reach for millennials, with prices rising and debt soaring. So, can any young adult afford a home?

By lowering your expenses and starting a savings fund, you can be on your way to qualifying for a mortgage. Make sure your credit is in good shape to qualify for financing combined with smart saving and investing will allow you to become mortgage ready!

Factors To Consider Before Getting a Mortgage

1. Get Organized. You should track your monthly spending, and then write down how you will save the extra money. It’s more likely that you’ll be able to save that extra $100 if you go over your expenses and see places you can cut back. An easy way to do this is to use an envelope system. Each time you get paid, put a certain amount of money in each envelope for a particular thing. For example, you could have an envelope for groceries, entertainment, gas, and more. You won’t be able to spend money from that envelope for that month.
2. Set Financial Milestones. Once you’ve gotten your spending organized, decide what you want to achieve in a year, in three years, and in five years. For example, maybe you want to be debt-free and be able to put $1,000 a month into your retirement account by the time you’re 25. After you decide on your financial goals, create a plan to achieve them.
3. Set Aside a Budget. The best way to keep your finances in check is not to spend more than you make. That might sound simple, but it can be difficult to do. Using a budgeting tool is a great way to stay on top of your financial situation. You can track your income, spending, and bills to see if you’re able to save anything. You could start with just $50 a month. Once the money is in your savings account, you won’t be able to spend it. As you get more comfortable with the idea of saving money, you can increase the amount.
4. Keep Your Credit Utilization Ratio Low. In order to qualify for a mortgage, you need to have a high credit score. One of the factors that will help you achieve a high credit score is a low credit utilization ratio. Credit utilization is the amount of debt you have compared to the amount of credit you have available. You can have a high credit score if you have a low credit utilization ratio.
5. Try Not to Apply for New Credit. When you apply for new credit, it will lower your credit score because it shows that you are extending your credit line. It’s easy to get into the habit of opening credit cards to get sign-up bonuses and rewards. However, those new accounts will hurt your credit score. Think about that big monthly payment you’ll have to make on your mortgage. You will want to make sure you have good credit to get a low-interest rate.

Final Thoughts

Buying a home can be a great investment and the first step in building wealth. However, you need to have a strong financial foundation in order to achieve this goal. Once you’ve gotten your spending under control, you can begin to save money and make smart investments to prepare for a home purchase.

Contact American Mortgage Solutions Today!

You’re now on your way and in good shape to qualify for a mortgage. American Mortgage Solutions FL is one of the best Cape Coral, Florida mortgage companies in Florida to help you with the home buying process. Get in touch with us today at (502) 327-9770 in Louisville or in Florida (239) 766-8344 and see how we can help you.