How To Apply For Mortgage As A Student?
In recent times, students, especially college students, prefer to arrange a mortgage rather than pay high rental fees which is a good idea because in arranging for a mortgage as a student, you are able to make some profits for yourself. For example, if you arrange for a mortgage and able to meet requirements, you can earn profits by renting some rooms in the house to other students or people or may need rooms to stay in.
But first, the frequently asked question is if a student can acquire a mortgage? The answer to that question is yes. Being a student doesn’t, by itself, disqualify you from acquiring a mortgage. But the most important thing to know is that the student must be able to meet qualifications for getting a mortgage. Also, most students who are not able to arrange a mortgage without meeting the income requirements often qualify with a co-signer. Using a co-signer, the parents or a significant other should be able to co-sign with the student if they meet the qualifications for the loan and earn enough to afford the mortgage.
Before applying a mortgage as a student, they are several considerations made and the major one is if you are going to school and work in the same area for at least five years and if not, it is not advisable to arrange for a mortgage because the investment might not pay off. Most times, the student ends up losing money.
Another consideration made is the reason for getting a mortgage. It should be weighed by comparing which earns more profit between renting a house for a period of time and getting a mortgage.
Another consideration is to know the best type of mortgage that is suitable for you. In acquiring a mortgage, the borrower should also find out the best mortgage suitable for him or her. The best mortgages could be determined by various factors, the most considered factor is the interest rate assigned to the types of mortgage.
They are various types of mortgage but the major ones include:
1. Fixed mortgage and
2. Adjustable mortgage.
The fixed mortgage as the name implies has a fixed rate home loan. That is, your interest rate remains the same for the full period of the loan. The fixed home loans can be ten, fifteen, twenty or thirty years. But the most frequent is the 30 year fixed mortgage because that makes your payment the lowest. After the 30 year fixed rate mortgage the next in line as a good option is the 20 year fixed mortgage rates.
The adjustable rate mortgage is the direct opposite of the fixed rate mortgage as the name implies. The interest rate on an adjustable rate mortgage can change annually. A hybrid mortgage is most like used under the adjustable mortgage whereby the lender can allow some years out of the full period of the mortgage to be at a fixed rate. That is, the lender might agree with the borrower that for the period of two years, the interest rate will be fixed after which the interest rate will begin to change annually depending on the value of one Treasury bill. Read: What to Know When Getting Your First Credit Card
Knowing the advantages and disadvantages of the types of mortgage is also important given the fact that it helps you to decide what mortgage type is most suitable to you.
One major advantage of the fixed rate mortgage is that your mortgage payment will remain the same, even if the interest rates changed. And this makes it great for budgeting. While a significant disadvantage of a fixed rate mortgage is that you are tied in for the length of the deal, so if interest rates fall, you can’t take advantages of them.
On the other hand, one major advantage of the adjustable rate mortgage is the tendency for the interest rates payment to decrease. But the disadvantage is that, as there is tendency for the interest rate to decrease, it is also possible for the interest rate to increase to a very high extent depending on the market values.
So, applying for a mortgage as a student is very much possible, so the question of how to apply isn’t necessarily the most important question to ask because it is easy to acquire mortgage from any mortgage agency whether you are a student or not. But the most important question to ask is if you as a student is able to meet up to the requirements to be granted qualification to acquire a mortgage. Also, it is important to study the types of mortgage comprehensively to be able to determine which mortgage is most appropriate or suitable to you so as to not lose money at the end of the day after acquiring the mortgage.