3 Tips For Buying A Home In Your 20s
You don't have to wait until you hit your 30s and 40s to purchase a home. You can get out of the rental cycle, and start building up your investments and wealth, by purchasing a home in your 20s. If you know you want to purchase a home in your 20s, there are some steps you are going to need to take to make that happen.
Tip #1: Work to Build a Solid Credit Score
When you first enter your 20s, there is a good chance that you don't really have a credit score, or you have a low credit score. You are going to want to take time to establish a credit history before buying a home.
Open a credit card and pay off the balance each month. Ask after six months to a year if you can get your credit limit increased. Slowly add additional credit cards, using them to build your credit score, not to rack up debt. Having credit that is available to you, but that you don't use, will help increase your credit score.
Even if you can afford to buy a car with cash, take out a loan and pay it off over the course of a year instead of six years, showing that you are responsible for bigger payments.
If you have any loans, be sure to pay them on time. Pay all your other bills on time as well; your regular bills may not show up on your credit report, but if you default on a bill, and it is sent to a debt collector, it will show up on your credit report.
Building up your credit score, and not making any mistakes with your credit score, will allow you to secure better terms on a loan.
Tip #2: Get Serious About Savings
If you want to purchase a home, you need to get serious about savings. It is true that there are a lot of loan programs, especially for first-time buyers, that allow you to down far less than the traditional 20% down payment.
However, the more you have saved, the more likely you are to get better loan terms. Additionally, the down payment is not the only thing you are going to have to pay. You are going to have fees related to the financing of the mortgage. You will have to pay closing costs. Depending on how the mortgage is structured, you will have to pay property insurance and real estate taxes in addition to your mortgage.
Once you own the home, you will have to pay for repairs and maintenance. Plus, you will need to pay for moving expenses and getting things to set-up your first home. The more money you have saved, the better prepared you will be for this experience.
Tip #3: Start Small
When it comes to purchasing your first home, remember that it is okay to start small. Your first home doesn't have to be a four-bedroom home with hardwood floors and granite countertops throughout. Your first home can be a small bungalow with one bedroom and laminate flooring.
This is the first home you will buy, not the last home. It is okay to start with a smaller home that meets your needs right now. Take care of the home, and build up the value of the home, and when you sell your first home someone, you will have the cash to help take you a step closer to your dream home.
If you want to purchase a home in your 20s, take care to build up your credit score. Get serious about savings, and make sure you have money for the purchase of the home, and money to take care of the home once you move in. Remember, when purchasing your first home, it is okay to start with a smaller home that fits your lifestyle and your needs right now. You can always purchase upwards in the future.
For additional tips, reach out to a real estate agent that can help you search for properties.