Hello again! My husband Nate and I just put a video up on my YouTube channel about how to buy a house at 18 years old. For the sake of it being our first video we wanted to keep the content fairly short. However for my blog post I would like to elaborate a little more on some of the key points.
As stated in the video, Nate and I met when I was 14 years old and got married just two days after my 18th birthday. Although we closed on our home a few days after my 19th birthday, I like to say we still bought a house when I was 18. We got approved for our mortgage in February (my birthday is in June) and we started the mortgage process by the beginning of April. Although all the technicalities happened just after age 19, we still got everything set into place at age 18.
So now that I have that out of the way, I am going to dive in and break everything down!
First and foremost, if you want to get a mortgage you need to:
- Establish Credit
I got my first credit card about a month after we got married (Nate had a credit card for a couple years). I know many of my readers probably already have credit cards, if that’s you don’t skip this point because you may find some of the information helpful! I was actually denied for the first card I applied for because I didn’t have previous credit! If this is you, don’t give up! The second time I applied I was approved.
While it is important to HAVE credit, you also don’t want to have LOTS of cards because the bank will look at that as potential debt. Higher credit limits are not your friend!
For myself, I used my credit card to buy groceries, gas and other necessities and made sure to always pay it off right away! You DO NOT need to take out a huge loan in order to prove to the bank that you have good credit. I would never advise getting a car loan or other form of debt to “establish credit”. Depending on your income, and whether or not you still owe on those loans, may even prevent you from getting a mortgage because the bank looks at your debt to income ratio.
- Have A Steady Income
When applying for a mortgage the bank wants to see that you have kept the same job for at least two years. This was true for both Nate and I, but they still could not count Nate’s income. Since, Nate was in full time Nursing school, he could only work Per-Diem as a CNA.
The bank would not count his income, because technically his work was not guaranteed. They only considered my income when pre-approving us for a mortgage, and at the time I only made minimum wage.
- Have A Savings
This is extremely important if you don’t make a lot of money! When Nate told me that he set up a meeting with the Bank I thought he was crazy. I remember I was completely embarrassed going that day because I thought for sure they would laugh at us. I already knew they would not count Nate’s income because we had already done some research on what they want to see. I thought for sure we were wasting our time but I am so glad I just trusted my husband and went!
The reason the bank was okay with my minimum wage is because they saw that, while we made very little (even including Nate’s income) we also were able to save $20,000 in the 8 months we had been married. How we were able to do so is for a whole different post!
I would like to add, many people buying their home choose to go with a First Time Home Buyers program. Using this program you usually don’t have to put any down payment, and that may be what works best for you! For Nate and I, we chose not to do First Time Home Buyers but instead went with a traditional mortgage. The reason we chose to do traditional is because we had money we could put down and the interest rates for FTHB are much higher! We did have to pay PMI (private mortgage insurance) because we only wanted to put a 10% down payment. For us that was still a better option than paying the interest rates for FTHB, which were 2-3% higher for us vs. a traditional mortgage.
- Don’t Have Debt!
Now I know this kind of goes a long with what I said above in my first point, but I think I should add to it. Though it is very important if you want to get a mortgage, it is also just as important for daily life! Nate and I do not believe in credit cards. We did get them in order to build our credit in order to get a mortgage, but they were simply used as a tool. Now that we have our home we absolutely never use them. Never.
Remember that it is 100% okay not to have a new car or the newest technology! I think so many people forget that you can get amazing deals by buying second hand whether it’s a car, a phone, a computer, and even furniture! When we first got married it was tempting to just get everything new, but patience is so worth it. Even to this day my husband and I always check Craigslist or eBay before going out and purchasing something for full price. There have been times where it is a better deal to just buy new, but most of the time it’s not.
The bank will be very pleased to see that you don’t owe any monthly debts. I also want to remind you that they do not consider what your paying for rent as debt, as this expense goes away when you purchase your new home.
I don’t want to make this post too long so I will finish with this. So many people (like myself) don’t even try to get a mortgage because they think they won’t get approved. Had my husband listened to me, we never would have gone to the bank and we never would have had this home! So all I can say is TRY. For us it was only about $100 more to OWN something of our own (this includes mortgage, property tax, and insurance)! For many people, switching to a mortgage is less than their monthly rent payment. So even if you have doubts that you will get approved-just try. I would advise that you at least have something in your savings first though. Even if they deny you a loan, they can give you very helpful information on what you can do in order to qualify.
I hope this post wasn’t TOO long and I hope you find the information helpful! If you have any questions please don’t hesitate to ask! Leave them in a comment below or contact me through email!