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Tips on Buying a Home in Your 20s

Buying a Home in Your 20s

Many people in their twenties choose renting over home ownership for a variety of reasons. But if you plan to stay in the same place for the next three to five years, buying a home could be a smarter move in the long run.

From building equity to tax benefits, home ownership in your twenties could benefit you for years to come. If you think you’re ready to be a homeowner, get started with these tips.

Buying a Home in Your 20s Start Saving

For six to 12 months or more, you should save as much as possible. Create a budget and savings plan, and stick to it. You will need money for a down payment, closing costs and other expenses. The more you save, the better positioned you will be when you are ready to make your move.

Build Your Credit

People in their 20s may not have much credit established, which can make it difficult to get approved for a home loan. Apply for a credit card and use it regularly for items you purchase anyway, such as groceries and gas. Pay it off in full every month. Never spend more than you can repay in a billing cycle if you can avoid doing so.

Watch Credit Reports

There are many online options for monitoring your reports and credit scores from all three major credit reporting agencies. You are also guaranteed by law a free report from each agency once per year, which can be accessed at www.annualcreditreport.com. Make sure that all of the information is accurate, and report any inaccuracies.

Research Down Payment Assistance

There are multiple programs that provide grants, zero-interest second mortgages, and other forms of down payment assistance for first-time homebuyers. Look into programs in your state as well as your city/county. In Florida, for instance, state programs range from $7,500 to $15,000 for first-time homebuyers who complete a homeowner counseling course.

Get Pre-Approved

Before you begin looking at homes, get pre-approved for a mortgage. If you’re going to use a down-payment assistance program, you will likely need to take the required class before making any offers. The assistance may not be available if the contract is executed before the course is complete, so make sure to follow the guidelines.

There are multiple loan options available. FHA loans, for example, only require 3.5% down. Research your options before committing to a lender. It’s wise to get offers from at least three different lenders before selecting a loan product. An inquiry on your credit report can affect your score, so you will want to have all three check your credit for pre-approval within a short time frame. Multiple inquiries for the same purpose should not negatively affect your score, though multiple inquiries over a longer period of time can lower it.

Don’t Buy Too Much House

Once you know the mortgage amount you’re qualified for, you can start shopping. But keep in mind that just because you’re approved for that amount, doesn’t mean you have to spend that much. Consider your other obligations and establish a budget that includes a mortgage payment that is comfortable for you. Don’t buy more house than you can afford, even if the bank is willing to give you the loan.

Do Your Homework

When it comes to choosing a neighborhood, don’t assume that what you see is what you get. Drive through neighborhoods at different times of the day and night, weekdays and weekends. Observe the traffic and the activity. An area quiet by day could be the site of loud parties at night. That’s something you don’t want to find out after you’ve moved in.

Keep these tips in mind and your first home-buying experience should be a good one. There are many advantages to owning a home, so making the effort to approach the purchase in the right way is worth the effort.

(7) Comments

  1. Shad Morris

    on   said 

    I have been trying to help my friend figure out how to buy his first home. It makes sense that you should get pre-approved for a mortgage. That way you know that you can afford it, and the bank can help you out.

    Reply
  2. Danni Black

    on   said 

    I really like your tip about doing your homework when it comes to buying a home! My husband and I have been thinking about buying a home for a while now! I think that these tips will really help us to get the home that we are looking for. Thank you for sharing!

    Reply
  3. Joy Butler

    on   said 

    I agree that it is important to save prior to buying a house. It is common for many people in their 20’s to live paycheck to paycheck, but if they are serious about owning a home they should learn to budget. My husband and I recently started considering purchasing a home and as we began our research process we realized that we need to save a lot more money for our down payment before we could make and offer. I wish I had known to save earlier on in life!

    Reply
  4. Frank Delaware

    on   said 

    You make a great point by saying just because you are approved for that amount, doesn’t mean you need to spend that much. I think that there are a lot of people that will look at houses that are within their budget, but will cost them quite a bit a month. In my opinion, I would want to spend as much as I am willing to pay a month.

    Reply
  5. Tomas Killington

    on   said 

    My wife and I are looking for our first home. We have finally saved enough to feel comfortable in taking the leap. I didn’t realize how important it is for first time home buyers to get pre-approved to ensure sellers take you seriously. I’ll be sure to do this before we look at homes.

    Reply
  6. Burt Silver

    on   said 

    Thanks for the information on buying a home! My wife and I really want to buy our first home as soon as possible, but we have had trouble knowing where to start. I like that you mentioned to build your credit as much as possible. That way, it will be easier to get a loan. We will make sure we do this.

    Reply
  7. Jane Ambrose

    on   said 

    My little sister and her husband are hoping to be able to buy a house soon, and I wanted to help them out by finding some helpful tips. It is so true that just because you get approved for a large mortgage doesn’t always mean you should take that much. In my opinion, it’s better to spend a little less than you are able just so that you have a little wiggle room. I’ll be sure to share this with my sister.

    Reply

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