6 Tips for Buying a Home In Your 20s
With 2015 comes the first big flood of millennials into the workforce after high school and college.
The mantra of millennials is pretty smart… buy things that appreciate in value… and rent things that depreciate. So they are already on top of the important aspects of personal finance.
Once out of school, many 20 to 30 year olds start thinking about establishing their career, and buying a home. Yet for many, when they try to make it work, they don’t think they can afford to buy a home.
Here’s what millennials can do to approach buying their first home the smart way:
1) Don’t rush into it.
It’s okay to rent first while you’re looking for a home and financing that suits you. It’s actually a great way to get to know the area before you commit to live there for the long term. After 6 months to a year, you’ll know if that area is for you, or if you’d rather live some place else. Maybe some place else that is less expensive.
2) Talk to your parents about their first home buying experience.
It’s likely they ran into a few problems when they tried to buy their first home. Their problems and mistakes are your learning lessons. You can also ask older siblings or other relatives about how their home buying experience went. I’m sure they’ll have some good advice for you.
3) Don’t try to figure everything out on your own.
In addition to talking with family and friends, a Realtor is a great person to get answers to your questions. Realtors are the point people that bring the deal together. And you don’t have to be ready to buy now, to start the relationship. Find a Realtor who sells the area you are interested in. Then ask their advice for someone in their 20s who wants to buy now.
4) Don’t assume you can’t afford to buy a home.
A big help with this is the fact that we’ve enjoyed historically low interest rates since the crash of 2008.
While last month’s stock market crash was serious, the raising of interest rates to stabilize the economy won’t happen overnight. And when it does, it will be increased by baby steps. So this still may be the best time for you to buy your first home.
5) Take advantage of first-time buyer options.
Even though you may be in deep with student loans right now, the FHA (Federal Housing Authority) still has programs for first-time buyers. Some that let you get into a home with as little as 5% down (instead of the standard 10-20%).
6) Ask parents for help with the down payment.
Where else would you go, when you have a problem and need help? You know your parents are always there for you. So now is a good time to strike up the conversation about getting a loan or a gift from them, that will enable you to become a first-time home owner.