You think you’ve found the one – the one you’ve dreamed about, the one that’s made for you, the one you could conceivably spend the rest of your life with. You think you’ve found your first home to buy.
But even though you think you’re ready to take the plunge and buy your first home, how do you know it’s the right time to say “I do?”
Buying a house, apartment or condo is a big commitment, both emotionally and financially. Research from the U.K. suggests that this generation of twenty-somethings believes that buying a home as a couple is an even greater commitment than marriage. And with a lingering recession and a not-so-stellar job market for this generation of twenty-somethings, less and less Millennials Are opting to buy homes. Couple that with record-breaking student loan debt and it’s no wonder that twenty-somethings are hesitant to take out a mortgage.
Yet despite the uphill economic battle facing many Millennials, many would argue that with interest rates so low, now is the time to buy a first home…that is, if you can afford it.
If you’re a twenty-something considering buying your first home, how do you know when it’s the right to buy? Here are a few factors to consider before purchasing your first home:
- Your plans to stay in the area: Your short-term or long-term relocation plans could impact when (or what kind of property) you buy. Are you considering buying your first home or apartment because you want to stay in the town you’re currently living in? If you’re looking to stay in the area for the long-term, buying could be a great option; you’ll be taking advantage of today’s low-interest rates on a property that you’ve committed to for at least the near-term. If you’re not sure where you’ll be living next, if you’re considering extensive travel in the near future, or you find the prospect of managing a renter unappealing, you may want to reconsider your housing options.
- Your ability to qualify for first-time homebuyer benefits: Depending on the state you live in and how much money you’re earning, if you’re in your twenties, you could likely qualify for a number of first-time home buyer benefits. Some nonprofit programs and state agencies provide subsidies and grants to first-time homebuyers, and first-time homebuyers meeting a certain income requirement can often qualify for subsidized interest costs, limited lender fees or flexible down payment options. If you do qualify for a first-time home buyer benefit like a preferred loan, remember that there are some restrictions (you can’t immediately sell the property, for example).
- Your ability to pay for a mortgage (and everything that comes with it): This seems like a no-brainer, but it can be a huge oversight for a twenty-something buying a first home. If you’ve been saving up money by living at home with your parents or sharing an apartment with roommates, make sure you’re cash flow could handle a mortgage payment. Oh, and don’t forget everything else that comes with buying a new piece of property: closing costs, property taxes, homeowners insurance – the works. One-time fees and recurring expenses can add up, and if you can barely afford the mortgage, you may not be ready quite yet to purchase a home.
Purchasing a home for the first time is a major decision, but could be an incredible investment opportunities in your twenties. Whenever you do choose to purchase a home, take your time, do your research and listen to your gut. You’ll know when buying a home feels right for you and your circumstances.