Buying a home can be a valuable financial investment, in addition to providing you and your family with the shelter and comfort you’ve always wanted. But there are many factors to consider in this major decision – and you’ll need to approach it intelligently if you want to maximize the benefits.
Special Considerations for Young Adults
If you’re buying a house as a young adult, there are a few special considerations you’ll need to bear in mind, including:
- Savings and income. As a young person, you probably don’t have as much in savings as your older counterparts. You may also have a job with a limited salary – even if it has a lot of upward trajectory. It’s important not to overbuy or stretch your savings too thin.
- Family status. What’s your current family status and how might that change? If you’re single, do you plan on getting married in the future? Do you plan on having children? If you’re going to add more people to your family, should you buy a house that can accommodate that expansion?
- Career potential. How is your career going to change in the future? Are you looking forward to making more money? What if you need to move to a different city?
Outline Your Goals
Before you start researching different areas or touring houses, it’s important to outline your goals and priorities.
For example:
- Time horizon. How long do you plan on living in this house? If this is a temporary move and you plan on being somewhere else in a few years, you’ll need to think carefully about the price and the near-term future of the neighborhood. If you plan on living in this house for 10 years or more, you can be more lenient with certain variables.
- Price point. How much of a house can you truly afford? This is one of the biggest questions you’ll need to answer, but it also happens to be one of the hardest to answer. If you’re treating your home like an investment, you’ll need to think about the overall purchase price and how that might grow; a “good deal” now can turn into a massive windfall in a decade or two.
Otherwise, you’ll need to calculate exactly how much you’ll pay for a mortgage (including rolled in expenses like PMI, property taxes, and home insurance) and whether that fits with your current income. Suggestions vary, but most experts suggest paying no more than 30 percent of your gross income for your housing expenses. Use this to set a firm budget – and don’t exceed it unnecessarily.
- Functionality. Obviously, you’ll need to think about the functionality of your home as well. How many bedrooms does it offer? How many bathrooms? Does it have all the features you need or want? Is it going to be easy to maintain or will it need repairs periodically?
- Location and future growth. Where do you want to live? Do you want to have the benefits of a short commute to work? Is it more important to be in a neighborhood with a good school district? Just as importantly, how is this area going to change in the future? Do you stand to benefit from property appreciation in the coming years?
Decide on an Area
Once you have your goals set, you should be able to narrow down your list of prospective areas to a handful of neighborhoods that can offer everything you’re looking for. At this point, you can start touring houses and review more nuanced details, like the age and condition of each house on your radar.
Work With Experts
As a young adult with no homebuying experience, it’s important to rely on the advice of experts throughout your journey. This decision is entirely yours, but the advice of people more knowledgeable and experienced than you can help ensure that decision is the best one.
- Real estate agents. No matter what, you should work with a real estate agent. They’ll help you tour houses, help you negotiate a better price, educate you about the law, and even guide you through the final paperwork.
- Financial advisors. You may also want to talk to a financial advisor. If you’re trying to optimize your decision for long-term financial gain, they may be able to give you new factors for consideration.
- Peers and mentors. It’s also worth talking to peers and mentors who have bought houses in the past, especially if they’ve bought in the areas you’re considering.
Buying a house is a decision that could affect your financial future for years, if not decades to come. It’s not something to be taken lightly. Take your time researching the possibilities and contemplating your goals; it’s always worth the effort.
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