Life can certainly be a whirlwind for 20-somethings. You’re completing your education, entering the workforce, and possibly getting married and starting a family. At some point during these years, you may also explore the possibility of buying a house.
Owning a home before age 30 isn’t a pipe dream like a lot of people think. In fact, the current average homebuying age in the U.S. is 33.
Continue reading to see if purchasing a residence at this time makes sense for you.
Benefits of taking this step at a young age
Are you tired of guessing how much your rent might increase next year? There’s none of that when you choose a fixed-rate mortgage. The steady payments make budgeting much easier since you’ll be paying the same amount every month.
Your own space
Part of the fun in owning a home is customizing it to your lifestyle and tastes. So if you want to paint the entire house or upgrade the bathrooms, you can do that. Forget about running an idea past your landlord and waiting for an answer.
Mortgage interest and property tax payments are tax-deductible. These deductions can reduce your annual taxable income and increase your refund. Contact a tax professional for guidance as it relates to your specific situation.
An investment for your future
You’ve probably noticed that home prices continue to climb in Colorado. This means that you’ll likely start building significant equity shortly after closing on your residence. Rent checks, on the other hand, go directly into your landlord’s pocket.
A sense of pride
Homeownership remains the American dream. Whether you’re looking for a single-family home with a big yard and lots of space or a starter home such as a townhouse or condo, you’ll be proud of your achievement. Trust us; there’s no better feeling than coming home after a long day and realizing the place is all yours and nobody else’s.
How to make it happen
Now that you understand the benefits of homeownership, here are some tips for making this dream a reality.
Improve your credit score
The lowest mortgage rates go to borrowers with the highest credit scores. Of course, without much of a credit history at this age, you might have a somewhat lower score. Do what you can to raise this number, such as paying off high-interest debt (as we explain next).
Get debt under control
Lenders will also look closely at your debt-to-income ratio or DTI. More debt translates to a greater risk of defaulting on a loan and, in turn, greater risk for the lender. Improve your DTI by paying down credit cards, personal loans, student loans, and other debt you may have.
Eliminate unnecessary expenses
Now’s the time to review your budget and see where you can cut expenses. If you want to buy a house, you’ll need some form of cash reserves. Put your savings in a separate account and avoid using the funds until closing day.
Save for a down payment
Once you start managing your debt more effectively and sticking to the essentials, saving for a down payment becomes fairly easy. You can supercharge your efforts by putting all windfalls and other extra income toward your down payment fund.
You’ve done the hard part by this point. But before you can make a strong offer in this hot Colorado market, you need to have a pre-approval letter in hand. This document shows exactly how much home you can afford and shows sellers you’re serious about making an offer.
It’s worth it in the end
The thought alone of buying a home can be scary for people. How would you keep up with your mortgage payments if you lost your job? Or what if you have to deal with major repairs soon after moving into your new place?
We want you to know that a home purchase is worth your while. If you’re concerned about cost, there are resources available for first-time homebuyers, as well as down payment assistance. Our friends at American Financing can also help you with a custom loan that saves you thousands over time.
Don’t let increasing home prices discourage you from buying a house at a young age. At American Home Agents, we know that home purchases are still a solid investment. That’s we do everything possible to help you succeed in this market.
The spring homebuying season is in full swing. Are you ready to land your first, next, or forever home in Colorado? Give us a call at (303) 695-5900.