Most twenty-somethings find their lives resemble a chaotic whirlwind; some are still trying to finish their college education, some are building a career, and some are already starting a family. Regardless of their plans, buying a property early on will significantly impact their lives, not just now but in the years to come.
While it may seem impossible to buy a house before reaching thirty, it’s actually doable. In fact, the average age of people buying a home in the United States is thirty-three. However, before making such a substantial investment, it’s best to weigh many factors that come into play. After all, depending on how you plan your finances, making such a substantial investment can significantly influence your life and the lives of family members.
Why You Should Consider Buying a Property While Still Young
Sure, many may consider investing in your own property risky–and it is! But, owning a property at a young age also has many perks, including:
Live in your own space.
Imagine living in your own space and living by your own rules. Nobody tells you what color to paint your bedroom, how many pets you can have, or what couch will go well in your living room. Buying a house allows you to make all these decisions according to what you think will best suit your lifestyle. It gives you a sense of freedom unencumbered by the dictates of others.
However, depending on where your house is located, you may be subject to HOA restrictions and local rules, which could limit what you can do. So make sure to research these limits before purchasing a property.
Buying a property helps increase your net worth. Your monthly payments (sometimes called “forced savings”) help you build equity in the property that you can later use to purchase other properties or make other investments. In effect, the payments mean you’re “saving” a portion from each housing payment you make instead of paying a landlord 100%.
Enjoy tax benefits.
Property tax and mortgage interest payments are tax-deductible, reducing your annual taxable income and increasing your refund. However, it’s best to consult with a tax professional for advice regarding these areas.
Have consistent payments.
Buying a property will free you from worrying about rent increases. Furthermore, fixed-rate mortgages on your home mean paying the same amount each month, which makes budgeting easier.
Enjoy a sense of pride.
Owning a home can make anyone proud, especially when you achieve this milestone while still young. Whether it’s a single-family home with lots of space and a large yard or a starter home like a condo or townhouse, there’s no greater feeling than returning home from work to a place that is all yours.
Take advantage of price appreciation.
Price appreciation can contribute to wealth accumulation, especially in bull markets. While there is no guarantee your home will increase in value, you can hedge against inflation by owning your house. But always remember, buying a house you love and want to live in is safer than buying one as an investment.
An investment for the future.
Home prices everywhere are on the rise. Owning your own home is an advantage and an investment in your future. Ownership represents an investment in your future. Once you own your house outright, your property’s equity rises with the market.
When Should You Consider Buying a Property?
Anyone can buy a property as long as they meet the requirements. One of the first steps when buying a house is to consider if you can answer “yes” to the following questions:
Are you ready to be responsible for maintaining and owning a home?
Can you afford the monthly payments and other recurring home ownership costs?
Do you plan to keep your home for as long as possible to recover transaction costs from selling or buying and make up for any price drops?
Can you get approved for a loan?
Are you prepared for surprises like unexpected maintenance costs or losing your home’s value in a weak economy?
How To Make Home Ownership A Reality
Buying a property can be a complicated and involved process, and with that in mind, here are some ways that make the process easier and increase the chances of making home ownership a reality.
Improve your credit score.
Borrowers with the highest credit ratings get the lowest mortgage rates. However, several factors, including limited credit history, might lower your credit score. If you have existing debt, finish paying it off as soon as possible, as this will increase your credit score.
Manage your debt.
Lenders will closely monitor your debt-to-income ratio (DTI). The more debt you have, the more of a risk of defaulting on a loan you represent. You can improve your DTI by paying your credit cards, student loans, personal loans, and other debts you might have.
Remove extra expenses.
When you plan to buy a home, this is the perfect opportunity to look at your budget and find ways to cut costs. You will need cash reserves if you plan to purchase a house. Try saving your money in a separate account and avoid using it until closing.
Save for your down payment.
Reducing your extra spending, managing your debt, and improving your credit score make it easier to save for a down payment on your home. Boost your efforts by putting any extra income and windfalls towards your down payment fund.
By the time you get pre-approved, you’ve already done all the hard work and are ready to make offers. Getting a pre-approval letter shows you are serious and lets sellers know how much you can offer.
There is no “best age to buy a house.” Once you turn 18 and meet the requirements in America, you can legally buy a house. So, if you (and your finances) can handle the challenges of home ownership, we suggest taking that leap and enjoying the perks of owning a property as early as possible.
Finance your dream home today!
Cedar Home Loans is your key to finding and owning your dream home. Contact us as the first step in buying a house, and get the best Colorado home loan that works for you.