Making wise investments while you’re still young can be difficult (and rare), but it sets the tone for a bright financial future. That is, if you do it right. Purchasing a home is a multi-faceted process. If you want to buy a home in your twenties, you must prepare for a little belt-tightening and a lot of research.
Wipe the debt
Before you begin shopping for homes and mortgage rates, know that you’ll be in better financial shape if you start by eliminating as much debt as possible. Pay off credit cards, starting with the highest interest rate or lowest balance cards.
If you are sweating your student loans, don’t worry about trying to pay off the entire balance before you apply for mortgages. Many lenders will be able to work with you on this, especially for first-time homebuyers. Getting rid of other debts first will certainly help your case, however.
Save, save, save
When you decide to buy a home, don’t get too itchy with your signature-writing hand. Come up with a long-term plan that includes at least a whole year of saving first. Try to put away 20% of your income if possible.
Not only will a year of saving help considerably with your down payment, it will instill long-lasting habits and teach you how to enjoy life on a frugal budget.
It is fun to fantasize about your dream home, but it’s important to keep your expectations in check when purchasing a home in your twenties. No one’s first home is a fantasy home, so aim a little lower than what you’re approved for, and you will learn enough to fulfill that fantasy in the future. Remember, if you’re buying any home in your twenties, you’re already ahead of the game.
No time like the first time
As a twenty-something, your greatest asset as a potential homeowner definitely isn’t cash; it’s time, your tech savvy mindset, and your status as a first-time buyer. Forego the nightly Netflix for a while and spend your bandwidth on research instead. Check local and federal regulations, programs, and grants. There is a lot of assistance available for first-time homebuyers, particularly if you can be flexible with location.
Know what you’re in for
The first time something expensive breaks in your newly purchased home, your reflexive reach to call the landlord won’t work anymore. Even after you’ve bought your home, keep saving and maintain an emergency fund. No one but you is responsible for repairs, replacements, taxes, and other costly home maintenance obligations. Talk to your family about home ownership stories and you will learn what to expect. Be smart and be prepared, and you’ll be adulting like a champ in no time!
Sources: EliteDaily.com; TheBalance.com
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