Mortgage For the Blue-Collar Man (Or Woman)
Believe it or not, working a blue-collar job has its advantages, though great pay usually isn’t one of them. Unfortunately, because blue-collar workers usually have fairly low income but do have decent job security (not likely to get fired), many blue-collar workers are attracted to 30-year fixed rate mortgages, which tends to get them more house for a lower monthly payment than other options. Well, in this article we’re going to talk about your mortgage options as a blue-collar worker. We’re also going to talk about things you can do in your career to make sure you’re improving your life over time.
There’s No Such Thing as a Dead-End Job
The “dead-end” job is a myth. If you choose to, regardless of what job you have you can turn it into something more. There is almost always at least one advancement opportunity internally at the company you’re working for. You can get promoted internally, or add your experience to your resume to apply for higher-paying jobs that you are now qualified for thanks to your experience at your current job. One job can always lead to another. I discovered this first-hand when my attempt at starting a business went south and I started working a retail job for $7.75 an hour. 8 months later, I was making $18 an hour at a much cushier job with better hours. How did I do it?
First, getting any job is better than no job, because employers prefer to hire someone who is already gainfully employed than someone who doesn’t currently have a job. So getting that retail job was worth a lot more than just the hourly wage. Second, I was genuinely grateful for employment, even when I was in my early twenties making less than 16-year olds at McDonalds. Always be grateful for your employment, because anything is better than nothing. Next, I wasn’t shy about making choices that served my and my family’s interests, but I also didn’t throw my boss under the bus when I found a better job. I went from my retail job to being a security guard, but when I did, I not only gave my retail boss four weeks’ notice, but I also offered to try and put in some hours until he was able to fill my position. When my last day finally came, my direct supervisor and the general manager of the store both offered themselves as references and even to write letters of recommendation. I did the same thing when I left my security guard job to work at an IT help desk. Did it make my schedule extremely taxing during the transition? Of course it did, but it was totally worth it because even now, years later, if I really needed a job, I wouldn’t have a moment’s hesitation to pick up the phone and call any of my old bosses and ask for a job.
Don’t Fool Yourself Into Buying More House Than You Can Afford
The reason why it’s unfortunate that most blue-collar workers choose 30-year fixed mortgages is that they end up buying more house than they really should. On the small income that most blue-collar workers get, having it heavily garnished by interest on your mortgage every year really defeats any attempts you make at building wealth. You’d be much better off getting a 15-year fixed or a VA hybrid ARM (if you’re VA eligible) on a cheaper home than getting a 30-year fixed on a bigger home in a nicer neighborhood. You’ll also be much more likely to be able to afford that bigger house sooner if you start with a smaller home with a better loan because you’ll accrue equity much faster, which is how you can save for a much bigger down payment on a bigger home.
Don’t Sacrifice the Long Term in the Name of the Short Term
The long term and the short term are not mutually exclusive; you can protect both. How? By choosing a VA hybrid ARM or a 15-year fixed-rate mortgage. What you want to try to do is make sure you’re paying more principal than interest with each monthly payment. That is virtually impossible on a 30-year fixed unless you pay a fair amount extra every month, which defeats the purpose of having a low minimum payment.
Paying more principal than interest each month sets you up both in the short term and the long term. Short term because you’ll choose a loan option and a home that is appropriate to your income, so you won’t default on your payment, and long term because you’ll be racking up equity in your home a lot faster, so 5 or 10 years down the road you’ll have a significant amount of money in your home that you can use for all sorts of things.
So there you have it: follow the guidelines I talked about in regards to your employment, don’t buy more house than you can afford, and choose an option that protects you both in the short term and the long term.