How And Why You Should Buy Your First Home In Your 20's

In the past, becoming a homeowner was a rite of passage. Most people already had a wife and kids by the time they turned 25. Today, the majority of people aged 25 are still living with their parents. However, this might change in the near future. Homeownership has too many benefits for today’s young adults to ignore.

Becoming a Homeowner Before You Turn 30

Sure, there may be a few more hurdles to becoming a homeowner in your 20s today but that does not mean it is not achievable. As long as you are willing to do whatever it takes, you can own a home. Just keep in mind, your approach will determine the outcome.

Understanding Your Down Payment

First, you must get together the funds for your down payment. Typically, it is recommended to put down 20%. However, there are ways to get around that rule.

Cutting Expenses:
Saving money comes down to lower expenses. As long as you continue earning the same amount, it’s impossible not to save when you spend less. Check your bank statements to review for any unnecessary purchases and avoid those in the future.

FHA Loans:
Some mortgages are backed by the federal government. If you can qualify for them, you may only need to put down 3.5% to get a mortgage.

Down Payment Assistance:
Down payment assistance programs also lend support to first-time homeowners. These give you grant money to use towards your down payment.

Minimize Your Student Debt Load

As a young adult, you probably have some student debt. This isn’t a huge deal, however, it could prevent you from securing financing.

Debt to Income Ratio:
The most important thing for the bank when you apply to get a mortgage is your debt to income ratio. Simply put, how much money do you earn compared to the debts you already have. Paying down your student loans will improve this metric.

Building a Phenomenal Credit Score

Your credit score plays a large role in your ability to get a mortgage. The better score you have, the better terms you will get.

What Factors Impact Your Score:
Most importantly, make all of your payments on time. Late payments are usually what hurts your credit score the most. Besides that, do not take on too much debt.

Closing on Your First Home

Now that you’ve got your down payment and a decent credit score, what is next? You must go out and find a house to buy. This will be the most fun part of the whole process.

Try to Find Something Within Your Means:
We suggest trying to contain yourself. Buying a home is incredibly exciting. It is very easy to let yourself buy something that is not really affordable. For your first home, it would be best to get one that’s well within your means.

Work With an Experienced Realtor:
An experienced realtor will be your guide throughout this whole process. Since you are still a young adult, you have never had any experience with real estate before. Rely on your realtor. You are in good hands.

Why You Should Want to Become a Homeowner

What is in homeownership for you? There is plenty of benefits associated with homeownership. In fact, you might say that not being a homeowner is a little crazy.

Mortgages Cost Less Than Rent:
What is your largest monthly expense? For nearly everyone, it is rent. Did you know, most of the time, a mortgage would cost less than rent for the same property? You could lower your monthly expenses by becoming a homeowner.

You Build Equity Every Month:
Plus, when you pay a mortgage, you do not lose your money. As a renter, all of your money goes to the landlord. Every time you pay your mortgage, you build equity.

You Do Not Have to Deal With Any More Landlords:
Best of all, there will be no more landlords. Finally, nobody can tell you to turn the music down.

The Path to Homeownership in Your 20s

Becoming a homeowner is well within your reach. Simply create a plan. Then, follow it. As long as you have the discipline and commitment to stick with it, you’ll be a homeowner before you know it.