Article Example | Noah Walker

Mortgage Loans as a First Time Buyer

Buying your first home can be a shocking experience, but with the right amount of preparation and knowledge, it doesn’t have to be. Unless you have an extremely wealthy family, you’ll probably end up requiring a mortgage loan to afford your first home. When people hear the word ‘loan’ they usually clam up and think of all the debt it’s going to bring. I’m here to tell you that mortgage loan debt is actually the best kind of debt to be in.

What is a Mortgage Loan?

A mortgage loan is something you can take out on a home to basically afford the initial purchase and you slowly pay it off every month like a normal loan. A major difference here is that the mortgage industry has its own form of credit score. That doesn’t mean your normal credit score isn’t important, however.

What are the benefits?

You can get started on living by yourself sooner rather than later.
Allows you to start a home financial investment early in life.
If used wisely, could even help pay off student loan debt in the long-run.
Leads to generational wealth if managed properly.
Mortgage Loan interest is one of the lowest forms of loan interest.
Your first home can be a more beneficial investment than a 401k.

That’s right, it’s actually beneficial to get started on a mortgage loan for your very own home sooner rather than later in life. By the time you know where you want to be and do, you can sell your house (which has hopefully grown into quite the asset!) and start somewhere fresh with a bit of wealth saved up.

Don’t take it from me, though. Take it from Mathew Abraham, a branch manager at a mortgage company whose been in the industry for over 28 years.

“Get to housing earlier, not later. Get into mortgage early in your life. It is the only debt that leads to generational wealth.”

That isn’t all Mathew had to say about the benefits of getting a mortgage early, though.

“Most kids coming out of college are actually getting pretty good jobs now even though they’re coming out with debt. Why would you not buy a house to start your wealth earlier? There are risks like not knowing where you’re going to end up years down the road, but you can easily build something that will at least pay you back for the next few years or so.”

He also stated the major benefit of a mortgage early on is simply:

“Think of your home as an investment or a better 401k. Prepare yourself for that investment.”

Mathew also had this advice for students just exiting college.

“I think people should take on and try their best to buy a house after a few years of exiting college. It starts their generational wealth way earlier and could be a massive investment for the future whilst also saving on housing costs. Manage your debt, manage your credit, get a good job, and then try your best to get into housing and utilize roommates who are willing to rent out spare rooms from you.”

But what about debt? Isn’t all debt bad? Well, yes, but actually no. In fact, Mathew stated:

“No debt is good. The world works on credit. So, pursue good debt that at least earns you something. Let someone else pay for the thing that is going to pay you.”

He actively advises against renting as soon as you can, and I have to say, I agree. See, renting is paying money on something that will never pay you back. Whereas using a mortgage loan to get a house? Well, Mathew described it as simply:

“Using someone else’s money at a low interest cost to build your wealth and provide you with an affordable housing option.”

How to Prepare Yourself for a Mortgage Loan

It’s no secret that a mortgage requires some kind of financial planning to get started. Here are some of the key things you can do to make sure you’re ready to take on this massive yet worthwhile investment:

Try to go into a mortgage with as little debt as possible.
Save up to 5%-8% of the total house cost beforehand.
Keep your credit score at 680 or better.
Work on having no late payments or collections.
Stay away from car loan debt!
Debt Management is the key.
Get a decent paying job ASAP.
Don’t go into a degree (Art, music, etc.) that will leave you in debt that outweighs your income your first few years.
Figure out around how much you’re going to be making those first 3-5 years out of college.

Safe to say the most important thing about a mortgage is minimizing the amount of debt you have. In fact, Mathew Abraham told me firsthand that massive student loan debt on lackluster degrees and luxury/car debt are the major reasons people cannot qualify for a mortgage. When approached with this topic, Shannon Volkodav, a virtual property realty agent, stated:

“It takes discipline to become a homeowner because it takes time to set aside money for a down payment and closing costs. Your diligence pays off in the end when you’re handed keys to your new home.”

She also said:

“When you rent a home, you’re just paying off someone else’s financial investment. Invest in yourself and buy your own home.”

That’s really all a mortgage on your first home is in the end. A major investment in yourself and your future. So, what are you waiting for? Make that leap towards owning your first home today!