It’s no secret that buying a home can be a challenging process, especially for those couples or individuals who are in their 20’s or 30’s. This is not something a young adult should rush into as it can prove to be extremely costly in the long run.
Factors to Consider Before Buying A Home
Thus, if you’re planning on buying your first home 5 or 6 years, here is some professional advice that will help you prepare for that momentous occasion.
- Try to determine where you might be living – purchasing that first home for the sake of homeownership is ill advisable. Here’s why. Most those couples and individuals in this age group are still trying to select a career path. Consequently, buying a home can restrict your mobility, especially if that career takes you to another city, state, or cross-country. Remember, the experts advise homebuyers to stay in their new home at least 5 to 7 years.
- Remember, it’s about how much home you can afford – once you’ve figured out where you would like to live, search a few home websites to learn more about the housing market you’re interested in. This will provide some perspective on the different properties for sale and what they are selling for. This will help you determine what you can afford and how much you’ll need to put down. If the homes in your neighborhood are not affordable, hold off until you can afford it or search another neighborhood.
- Start building and improving your credit NOW – your credit score plays a significant role in the home buying process, more specifically, your ability to qualify for a mortgage. A score of 740 or higher is ideal when it comes to getting the best interest rates. If, on the other hand, your score is below 740, you should expect a higher rate. You’d be amazed at how many young adults already have dings on their credit reports from late credit card payments and student loans. Thus, start early and ensure that you have a good credit rate by the time you intend putting
Start Saving Towards A Down Payment
This is a key aspect if you want to get the best mortgage terms possible. You’ll need to put down at least 20% of the agreed upon selling price of the home. This will help you avoid having to pay PMI (private mortgage insurance). Keep in mind that 20% isn’t chump change. For example, if you’re buying a $250,000 home, that 20% equates to $50,000.