Real estate markets are always changing. Depending on your city and timing, you may be able to score the deal of a lifetime buying your first home. A first home purchase is likely the biggest purchase you will have ever made in your life, so knowing what you’re getting into and making an educated decision is imperative when getting started.
What is the Right Age to Buy Your First Home
Deciding when to buy your first home requires taking a few factors into account. You have to know that you want to stay somewhere for at least five years to make financial sense. You should also feel stable with your job and income so you don’t have to stress about making your monthly payments.
It can be overwhelming to think about buying a home when you are in your first job out of college and just starting to feel grounded in your new life. Waiting until your mid-twenties or early thirties can make the process much less nerve-wracking.
It Can Be a Great Investment
When I bought my first condo, I searched for almost six months to find something that I knew I would love and would go up in value over time. I hit the jackpot on both.
As a young person, you can buy a cheaper home to fix up or one in a hot neighborhood with rising real estate prices. I negotiated a hard bargain on my first home and was able to triple my money in less than three years.
Make Sure You Can Afford It
Before you get ready to buy your first home, make sure you can really afford it. Sometimes your monthly cost will be lower than renting, but you need to make sure you think of every cost.
Saving up a down payment is always one of the hardest parts of buying your first home, particularly if you are young. While it is possible to buy a home with less, the best plan is to save at least 20% of the home’s value as a down payment.
20% down will help you avoid private mortgage insurance (PMI), which raises your monthly cost. It will also show lenders that you are serious and in a situation to own a home.
Also take into account that your monthly payment will include your mortgage amount plus property taxes and home owners insurance, which can increase the monthly cost significantly.
You Can Always Move
Remember that owning a home is a big commitment for years, but it is not a commitment for a lifetime. When I bought my first home, I wanted it to be a place I could live on my own, with a roommate, or with a future wife comfortably for at least a few years, and might be able to rent out when I moved.
I was there for a while it and it was wonderful, but when opportunities arose to move across the country for a great new job, I knew it was time to sell and move on.