Just 40 years ago, the average first time home buyer was between the age of 21 and 34. Today, the average age of first-time buyers is steadily in the mid 30’s. Less consumers are buying homes in their 20’s. In fact, one may say that gone are the days of leaving home, getting married and buying a house after college. 74% of first time home buyers lived in rented accommodation and a whopping 21% still live at home with their parents, even after starting families of their own. Many people never manage to buy their own property, instead spending their lifetime renting. Needless to say that today, home ownership is not as easy as it was a generation ago.
Should you buy a house in your 20’s? When it comes to financial assets, the position on home ownership is controversial. While some think that there are many benefits to purchasing property in your 20’s, others see home ownership as a liability until it is paid off. Regardless of the position that you hold, it is imperative to be financially stable before purchasing a home. It should never be an emotional, impulsive purchase. On the positive, when you think long term, buying a home in your 20’s implies that you could pay off your mortgage before retirement with a conventional 30-year loan. As a result, saving for retirement could be facilitated. This only happens when you maintain good financial decisions as you age. Unfortunately, many people manage to carry their mortgage well into retirement and covering such a large expense every month becomes a burden.
I purchased my home at the age of 29 and a year later, I am enjoying every bit of the experience of home ownership. Looking back at the work and cost that goes into maintaining a home, there is no doubt that financial instability would lead to a foreclosure. You should not decide to buy a home because you can afford the mortgage payment. We will not get into the intricacies of home ownership in this article but I should say that it is so much more complex. But inevitably, millennials are buying home and fueling the housing market. If you’re reading this article, home ownership is probably on your mind as well. So, here is how to position yourself to make the move when the time comes.
Start with your goal and your vision
I guess that when you bought your car, you had an idea of what you wanted in mind. You didn’t just show up at a dealership and paid for the first car that was presented to you. You should have the same mindset with a home. Define exactly what you’re looking for in a home: location, size, type, color, number of bedrooms and bathrooms, etc. Do you want a big yard? How close do you want your neighbors to be? Do you want to have to pay for an HOA? Are you looking for a brand new construction? These are some of the questions you must answers. Once you start the process of looking for a home, knowing what you want will save you time and frustration. It will also help you assess whether you’re ready financially or if you should delay.
Your budget is crucial. Look at properties in the area you’d like to live and work out how much you need to save. Then, sit down and write a plan. As I said above, you should not only consider the mortgage payment. One of the reasons why some people dislike home ownership is the added cost. Trust me, I wish I could call a landlord who would take the responsibility to pay and fix any appliance or system. I am the owner and it all falls on me. Consider extra expenses when budgeting for a home. Decide how much you should save every month and for how long to reach your timely goal.
When planning to purchase a home, get into the mindset of only buying what you can afford and avoid credit. If you don’t have the money in the bank, you can’t have it right now. This shift in thought process will get you closer to homeownership.
But, at the same time, you need some credit leading to a good credit score. Without it, you’ll struggle to build a credit history strong enough to get approved for a mortgage. In the months leading to the purchase, it could serve you well to speak to a broker and determine how your credit cards or debt are affecting your credit score. Even when you pay a credit card off every month, simply not swiping it and keeping a zero balance could increase your credit score. If you’re looking at consolidating instead, best.creditcard cites the best options currently offered. Choose wisely the credit card which will help you achieve your goal.
You’ve got a budget, and you know what you can afford to save. Now, you need to open a high-interest savings account and start making regular deposits. I found that online accounts offer better interest rates once you reach the $10,000 threshold. Set up a regular transfer to your savings account, then add more whenever you can. The secret is consistency.
Budget, avoid debt and save: these are 3 simple steps that when applied religiously could lead to home ownership for you. Set up your goal today and I hope you get to enjoy calling a place yours in the near feature.
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