5 Tips for Young Homebuyers
While the current status of the job market and ever-present student loan debt have certainly made younger generations skeptical about becoming homebuyers, there are still plenty of reasons that purchasing a home could be a smart investment for your future financial goals. Check out these tips to consider if you’re considering your first home purchase.
1. Do you plan to live in the home at least five years?
There are several closing costs associated with purchasing a home and it typically takes about five years to recover those costs and generate a return on your investment.
2. Don’t assume you can’t afford to purchase a home.
Although it is typical to have anywhere from 3 to 20 percent of the total mortgage cost to put down up front, in some markets renting may be just as expensive as homeownership, saving you money in the long-run. With low interest rates, eager lenders and even federal loan options, buying a home may be within your reach.
3. Get preapproved for your home loan.
Having a lender research your financial history and inform you of the maximum amount they will lend you will save you time. If you begin with a preapproved loan you can have a more focused search and not waste time on visiting homes that are out of your budget.
4. Having an inspection is a must.
A home inspector’s responsibility is to give you all the information on the home’s condition so you can make an informed decision on the purchase. Buying a home is usually the biggest investment one makes, so it is important to know exactly what you are buying. It is good to know what condition the home is in and if repairs are needed. You could also use any issues you note as a bargaining tool for lowering the purchase price.
5. Check out the neighborhood.
While knowing the ins and outs of the home you’re considering is key, it is also important to know the neighborhood. The value of your home is often based on the neighborhood and surrounding areas. Ask yourself, what is the school district like? How close am I to grocery stores, restaurants and other services? What is my daily commute to school or work?
Buying a home is a big commitment. Making sure you have your finances in order and that you understand all the costs associated with owning a house can help you plan the best budget for your lifestyle. Being prepared for the homebuying process (and the taxes, insurance, and home repair costs that come with it) can help you find a house that fits your budget and turn it into a home.
Want to learn more? Visit our First-Time Homebuyers page.
Information in this article is general in nature and for your consideration, not as financial advice. Please contact your own financial professionals regarding your specific needs before taking any action based upon this information.