Years ago, it wasn’t uncommon for your parents and grandparents to buy their first home in their 20s and 30s. Purchasing a ‘starter’ home was a sort of rite-of-passage for young professionals and couples when the time came to marry and start a family, and it wasn’t even uncommon for parents to provide the down payment as a wedding gift. Those were the days when life was more defined; people tended to set goals early on, abide by certain societal expectations, buy a home and establish roots in the same community they themselves were raised.
Times have changed of course, since the generation known as X came into young adulthood in the mid 1980s. Gen Y and the Millennials quickly followed, redefining the concept of home ownership. This generation of potential homeowners travel far more than their parents or grandparents did. They accept distant and overseas positions routinely, many times for jobs that will only last a few years before they pick up and move on. They embrace the opportunity to travel and raise children in the larger global community, and aren’t looking to tie themselves down to a home in any one location.
Still, many of these global relocators prefer to be homeowners and will buy a home in their new location with plans to sell it a few years later when they’ll move on and repeat the process.
But for most 20- to 30-somethings, the choice between renting and buying may seem predetermined by their circumstances. However, many people who believe they’re unlikely to qualify for a home loan might be surprised to discover they actually do qualify, thanks to a variety of creative financing options available today. Here we offer some tips on how to discover whether you have homeowner potential, how to weigh your options and how to reach a well-thought-out decision that benefits your lifestyle.
Take as much time as you can for decision-making.
Most of today’s young adults graduate college saddled with huge student loan debt and little to no savings. The sense that they can’t afford to buy a house, even a few years down the road, can be self-sabotaging. If you really want to buy a home start learning everything you can about markets and how others in similar circumstances manage to become homeowners. Talk to real estate agents routinely not only to ask questions and get advice, but to find an agent you could feel comfortable working with when the time to buy is right.
Don’t assume you can’t afford to buy a home without getting the facts.
Even student loan debt doesn’t automatically disqualify you from mortgage loan eligibility in your 20s, nor does it mean you can’t afford to take on a mortgage. Mortgage brokers and lenders nationwide are willing to work with first-time home buyers, and can offer incentive loan options like those made available by the Federal Housing Authority (FHA) that enable qualified buyers to purchase a home with as little as five percent down. At the very least, a qualified lender can explain your options to you and help you weigh the pros and cons to determine if buying now is not only do-able, but if it makes good financial sense.
One additional fact that is often overlooked, renting is often just as expensive as buying. You won’t know where your best value is until you do your homework and crunch the numbers.
Do not attempt to plunge into your discovery process without the help of a real estate agent.
No matter how adept you are at accessing and making sense of online real estate listings, you simply can’t replicate the role of a licensed, experienced realtor who brings years of knowledge and clout to the table. An agent has experienced most, if not all of the problems that can arise at any point in the home buying process, and he or she knows what to do to resolve most issues to your advantage. A good agent can help you reason through self-doubt, advise you on options that will benefit you and act as a resource on your behalf to make the home buying process a positive experience.
An agent who has viewed hundreds of homes, established relationships with dozens of other agents who have their own intellectual artillery stockpiled, and recognize the very personal and emotional nature of home buying are invaluable to buyers, particularly the first time variety.
Ask for advice from parents, friends, other family members—anyone you know to have personal experience in the home buying process, even if theirs is from another time and market. They have the fundamental home buying experience that is universal in many regards. Even if they bought their own home before the days of online technology, they may be able to add value to your search with solid financial guidance or other helpful insight gleaned from experience.
Knowledge is power, and patience is a virtue.
As a young, first-time home buyer, take advantage of all the amazing tools available to you including the Internet, competitive loan options and a welcoming market. Use these tools, your realtor, and the experience-based input of family and friends to form an unrushed and educated opinion. Don’t succumb to pressure from competitive bidders or a fast-moving market before you’ve spent time really learning your market and attending more than a few open houses. You’ll know you’re ready to buy when you actually feel comfortable with the market, your pre-qualification requirements for a loan, your price point and your expectations. Even if it takes making offers on three or four homes before you find the best one at your price point, it’s worth all the benefits you’ll receive from remaining patient and focused on your goal.
If, over time, you find the sheer volume of information and data that will become available to you in the information gathering process causes you to question the wisdom of buying a home at this point in your life, take a step back to reassess. Chances are you aren’t quite ready for such a commitment. However, if you discover that all the pieces fit together—you have a down payment saved, you can handle the monthly mortgage payments for which you’ll be responsible and you can commit to the home for at least 5-7 years, you’re ready to take the next step toward home ownership.