Mortgage rates are at historic lows, which could make some young professionals tempted to jump right into homeownership. If you’re a recent college graduate still living at home, you might be eager to get a place of your own. If you’re renting a place by yourself or even sharing expenses with roommates, you might feel tired of spending money on rent instead of building equity in your own home. Let’s look at what it would take to skip right over the rental phase of life.
Real estate experts will caution you to buy a home where you intend to stay for at least five years. That’s because, financially speaking, it isn’t until you’re about five years into paying your mortgage that it’s worth not paying rent each month. So if you think you’ll be job hunting or your company might have plans to relocate you in the near future, it might be best not to lock into such a significant loan.
Don’t be lured in by the idea of a fixer-upper you can get for a steal. No matter how many home improvement videos you’ve watched, if you don’t have a background in construction or all the related trades — or at least have a family full of skilled professionals in those areas — the reality is that it often costs far more to renovate a home in need of major repair than you’d ever anticipate. The real downside is that you may not be able to recoup those costs when it comes time to re-sell the home.
We understand when you’re living with your parents, you’d rather get out on your own. But there’s a huge opportunity here to take advantage of this time under their roof to save as much money as you can. Pay off your student loans and all other outstanding bills. Now is not the time to buy a new car, expensive furniture, or the latest electronics. Those living rent-free have an opportunity to save and pay off debt while not having to worry about how to cover the most basic — and, usually, costliest — expenses.
With all of that in mind, when it’s time to start looking for your first home, there are other considerations for getting ready to take that step, too. You can also follow a basic timeline for getting financially prepared, even while you’re still renting.
And if you want to see what the options are for new construction homes, contact us!