Buying a House Young? No Problem! These 7 Simple Tips Can Help!

The housing market is starting to cool down with just 16% of people running into bidding wars given lower demand. That reality coupled with an up economy is inspiring a lot of young people to jump into their first home.

Owning a house can be a very special experience. As a homeowner, you have complete control over where you live and get to enjoy the financial appreciation of your house over the years.

Buying a house young is not without its challenges though. To help you better understand how to make your house buying experience as smooth as possible, below, we outline seven simple tips that are worth keeping in mind.

1. Save 20% For Your Down Payment

The traditional down payment for a house is 20% of a home’s value. With that said, many lenders are willing to accept a lot less than 20% when giving out a home loan.

Just because you can get a low down payment doesn’t mean that you should.

When you invest less than 20% in your home up front, you’ll get hit with what’s called PMI (private mortgage insurance). This insurance protects your lender from you defaulting on your house and can cost hundreds of dollars per month.

To save that money, do everything that you can to cross the 20% threshold when buying a house young.

2. Fight the Urge to Buy in a Seller’s Market

We get it. You’re young, you have some cash and you want to beat all your friends and family members to buying a house.

We respect your competitive spirit but keep in mind that now might not be the right time to buy a home.

Sure, housing markets are cooling down, but they’re also coming off of historic hot streaks, meaning prices are still high.

Housing definitely has a long way to go before it becomes a good value again. Until things get a little better, the best strategy may be to wait. It’s important to talk to an experienced agent that knows the local housing market before committing.

3. Understand Your Mortgage Options

There are a lot of different mortgage types out there. Some of which could benefit you more than a standard mortgage product.

For example, FHA loans are designed for first-time home buyers and enable people to put down as little as 3.5% on a home. VA loans are for veterans and can get former military men and women into houses with no down payment at all.

Talk to a financial advisor and do some research online to see which type of loan might be the best for your particular situation best.

4. Look Out For Special Incentives

Did you know that there are various local and state incentives available to certain kinds of home buyers?

For example, if you’re a teacher, police officer or firefighter, many areas will offer you grants to buy homes within their community. Some programs through the FHA might even help minority home buyers make home purchases.

A quick Google search on what kinds of incentives are out there could end up saving you thousands on your home’s final price!

5. Figure Out How Much Home You Can Afford

Buying a home young often correlates with buying too much home. What we mean by that is that young people are more susceptible to buying houses than they can afford.

It’s important that you fight that urge to go big or you may end up back at your parent’s house.

As a general rule, your housing expenses shouldn’t exceed 30% of your monthly take-home pay. Those expenses should include your mortgage, utilities, insurance and any other costs that are keeping a roof over your head.

Young people that are counting on a partner’s income to afford things should also plan on the possibility of a break-up and how they’d cope.

6. Get a Good Agent

Finding a good real estate agent that’s always willing to give you more information on an area and answer any questions you may have is integral to finding a great place to live.

You may run into some agents that shy away from working with young home buyers. Don’t get to discouraged if that’s your initial experience.

For every agent that would discriminate against you because of your age, there are two excited by the prospect of getting you into your first house!

7. Don’t Rush Into Things

Buying a home is a big commitment. It’s one that a lot of people rush into too fast and end up regretting.

Don’t be one of those people.

If you’re thinking about buying a home young, ask yourself if you could do with renting for a little bit before jumping into a permanent housing situation.

As a young person, you might enjoy the lifestyle flexibility that renting offers a lot more than the tied down nature buying a home entails. Renting will also allow you to sample a community to make sure that you love it before putting down roots.

Wrapping Up Our Tips for Buying a House Young

Buying a house young is something that should excite you. It’s an experience that few people get to enjoy. If you’re in a financial position to buy a home at a young age, our hat goes off to you and we wish you the best as you look to find the home of your dreams.

Keep our tips in mind as you shop, and always feel free to reference more of the lifestyle content that we publish on our site if you need additional advice!

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