For many, the ultimate life goal is to own a home of their own. Have you prepared your teen for adulthood and made sure that they understand home mortgages and what it'll take to get financing to purchase a home? Here, you'll find a few tips to pass on to your teens or adult kids to hopefully help them end up as homeowners without a struggle.
One of the first things that a home mortgage lender will look at is job history. If your teen's job history shows that they've skipped around from job to job and haven't held a position for at least a year, they will have a hard time getting financing for a home or even a car.
Encourage your teen to find a job and stick with it. They can change jobs within a company, but they don't want to be quitting one job to start over with a new company entirely. The goal is to have a full-time job for at least one solid year before applying for a home mortgage; the more years of employment, the better.
So many creditors start sending advertisements and special offers to teens from the time they begin working or if they apply for credit somewhere online. Once these offers begin to roll in, many teens will apply and open up several new lines of credit, max out the cards and make minimum payments on the account each month. This will damage their chances of getting a home mortgage.
Make sure that your teen understands this. They will need to begin paying down the credit cards – at least to have the total maximum allowed on each account. They want the accounts paid down, and the ones with the highest interest rates or membership fees should be paid off completely and closed.
In order to get a home financed through a home mortgage, chances are, you will need a down payment – generally, about 10% of the purchase price of the home. Sometimes, the down payment isn't needed if the value of the home is much greater than the purchase price, but in most cases, it's best to be prepared to purchase a home with a down payment in hand.
Talk with home mortgage lenders to find out what else you or your teen will need to know to get through the home purchasing process with the financing that is needed at a rate that's affordable.