How to Buy a Home in Your 20s
Millennials today have a reputation for knowing what they want and going after it. But many are having difficulty with the idea of buying a home. For earlier generations it was possible to prepare to buy a home with just a traditional job and salary. Today, 20-somethings even in higher-paying positions are finding it difficult to save up the money that they need for a down payment. However, buying a home in your 20’s is possible, it just requires some careful planning and preparation. Here are 10 tips on how you can buy a home in your 20’s and enjoy a better lifestyle for your financial future.
1. Consider Your Lifestyle
Determine first if it is time to consider buying a home. Evaluate your lifestyle and your ability to commit. Are you in a stable job? Are you likely to have to relocate in the near future? While the financial benefits to owning a home a great, you may want to postpone a purchase of this magnitude if you are expecting to move within a year or two. Most homeowners remain in their homes for a minimum of 3-5 years as it often takes that long to recoup the costs of purchase! Also take a close look at how you spend your time. Do you have time to devote a few hours a week to upkeep and yard work for your home? If not, maybe a condo would be the better route for you.
2. Understand Your Finances
Building a budget is one of the first ways that you can start to understand if you are ready to purchase a house. Understanding how much money is coming in, how you are spending your money and if you can potentially handle the expenses of property taxes, maintenance and upkeep as well as the cost of your mortgage. Keep in mind that a home is a big expense and you can expect to pay around $3000 a year on home maintenance for $300,000 house. Be sure that you can set aside money on top of your regular home maintenance and mortgage costs each month.
3. Start Saving Aggressively
While preparing your budget, you are going to want to make sure that you can start saving for 6 to 12 months for a down payment. This will mean having the money that you could regularly set aside for mortgage payments, maintenance, closing costs and lawyers fees. Asking your parents for assistance or friends and family can be a great way to proceed.
Fixing your credit: after looking into your budget and determining how you will save for a house as well as afford a house over time, it’s very important that you work on your credit. Taking some time to pay off debts, make agreements with creditors and work to establish a quality credit history will help you to get a better rate on your mortgage. It may be worth spending a few years of fixing and saving your credit to save money on the cost of your home.
Consider support programs you could use: you may be surprised to know that many first-time homebuyers can get access to assistance for down payments through FHA loans, tax rebates and more. The betting on where you live you could qualify for a number of assistance programs to help get you into a home faster.
Receive your preapproval: Before you go looking for homes receive preapproval from a qualified lender so that you can get an idea of what types of mortgages you qualify for. Remember that you should never go to the very edge of your qualified amount. Stick to your budget and to a home that you can afford.
Find the right real estate agent: You need to make sure you are working with a real estate agent you can trust. With the right real estate agent you can feel much more comfortable with the listings you are going to see and you will feel as though they are being honest with you through the viewing and listing process.
Discover the right neighborhood: discovering the right neighborhood in choosing a place where you want to live can provide you with a number of cost-saving benefits. Living close to where you work or in a central location can really help with transportation costs. Choosing the suburbs instead of living in the middle of the city can save you money up front on the cost of your home. By doing some research into neighborhoods, amenities and average home prices you can eventually find a home that you like and in a neighborhood that you can afford.
Do some extra homework before you buy: Check into the driving through the neighbourhood of a home you really like during the day and night, see what a rush hour commute might be like in this area and find out how close amenities like the grocery store may be.
Don’t get in over your head: With any home, make sure that you do not accept the max approved financing amount unless you have received a substantial raise between preapproval and offer. Buying a home that is at the max of your budget or even over budget can make budgeting for the future and your savings, much more difficult. Get a home that you can comfortably afford each month while still enjoying all of the other activities you love.
Consider these steps and remember that if you are committed to buying a home early enough, purchasing a brand-new home or a home in your area while you’re in your 20s is completely possible!