Advice for Young Homebuyers
By E. E. Kane
Photo: © Sandra Gligorijevic - Dreamstime
 When a lot of really smart people agree on something, you can usually count on their advice. And most smart (old, sage) people agree that you should put off buying your first house if you have just graduated from college. The stereotypical twenty-something has: student loans, car loans, credit card debt, expensive tastes, and an entry-level job.
But the beauty of being young is that if you believe you can be different, maybe you can. Look closely at your finances and circumstances. If you meet the criteria, buying a house now might be a smart move.
Ask yourself these questions:
Will you need to move in the next 2-3 years?
If so, wait to buy a house. You will lose on closing costs and fees, and you can’t be sure home values will rise enough by then to make a short-term investment worth it.
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Do you have job security?
Maybe you work for the family business and intend to take a leadership position at 32, or you’ve realized your dream and opened a beauty salon in a snazzy part of town. If you are happy in your career and are certain that you have job security, you are ready to buy a house.
Can you save for a down payment?
The bad news: gone are the days when moneylenders offered loans with no or very low down payments. The good news: you are a bit safer from signing your name to a risky loan offer. If you can’t borrow it from relatives, start saving now. In some cases it might be a better idea to save toward a down payment instead of making double payments on student loans or credit cards.
Can you afford to maintain a home?
Deciding how much house you can afford includes much more than just monthly mortgage payments. Be sure to factor in property taxes, home insurance, neighborhood fees, maintenance and repairs.
How much debt do you have, and what are the interest rates?
Mortgage lenders will look at your debt before deciding if they will carry you, and what interest rate they will offer. If your accumulated debt is manageable, and you’ve been cutting down the principal, not simply making interest payments, you may be ready to invest in your own home, instead of paying someone else rent. |
