This is the ultimate guide for buying a house in your 20s
In your 20s, the idea of buying a house may seem impossible. As a recent graduate, student loan debt is a major concern. You are working at an entry-level job with no prospects for a raise.
Although homeownership may seem daunting, millions of Millennials can do it. The single largest group of homebuyers in the country is now the Millennials. Many are buying homes alone, long before children or marriage are even on their radar.
Is this the right move for you? And, most importantly, is it possible to afford it? Let’s get it down.
Benefits of purchasing a home while you are still in your 20s
There are many benefits to homeownership, especially when you’re young. A home can be a long-term investment in your 20s. If you keep it long enough, it could lead to significant wealth building. You can sell the house at a profit, make it an income-earning rental property, or live in fully-paid-off housing in retirement (though that may seem far away).
Is it too young to purchase a house?
There is no right or wrong time to buy a house. Although you are legally allowed to purchase and own real property at 18 years old, that doesn’t mean that it is the right decision for everyone 18.
It’s a large and costly purchase that you will need to live in your home for many years. You should wait until you have a steady income, a stable job, and decent credit to be eligible for a mortgage loan. This will allow you to pay the monthly mortgage payment while you live in your home.
Here are some things to remember before you buy a house in your 20s
Be sure to consider all financial considerations before you make a serious decision about buying a home.
Consider these things:
Are you satisfied with your current job? Are you sure that you will be there for a long time? Are you able to move because your career takes you outside the area? You wish to remain in the house for at least a year to recover your transaction costs and make the property profitable.
What is your annual income? What percentage of your after-tax income can you put towards housing? To calculate how much your mortgage is likely to cost, use a mortgage calculator. Make sure that you have enough income to pay for maintenance/repairs, as well as regular monthly expenses such as food, utilities, car payments, and so on.
Are you considering marriage? Are you looking to have children or pets? Are you able to afford a home that can accommodate these changes? It is important to ensure that your home purchase matches your plans and goals.
What are the current mortgage interest rates? Is it better to wait for rates to drop so that your monthly payments are more affordable? If you aren’t sure, talk to a trusted loan officer and make sure to compare rates. They can vary from one lender to the next.
Your local market
How is the housing market in your region? Are home values rising? Are home prices still affordable? A home that will increase in value over time is what you want, and it will bring you profit. Talk to a local agent if you are unsure if a house is worth your investment.
You also have to be responsible. You will need to be more involved in maintaining your home than you would if renting. Before you move forward, make sure that you are ready to handle all the responsibilities of homeownership.