Buying a Home In Your 20's

Article by Guest Writer: Sally Norton

Are you of the opinion that you are too young to be a homeowner? Well, unless you are a teen still living with your parents, you definitely aren't! If you genuinely wish to buy a house in your 20s, the good news is that that's possible. Investing in a property will, most likely, be the most grown-up thing you've ever done. And let me tell you, it will be anything but easy. Still, if you feel confident about your decision and wish to proceed, then so be it! This article will attempt to familiarize you with the matter of acquiring housing young and why, in the end, doing so might even prove the best decision you've ever made!

Why it makes sense to buy a house in your 20s
​Like there are differences between purchasing housing before and after getting married, there are those between purchasing housing in your 20s and later on in life. The younger you are when you buy, the more financially secure you will be in your future. While you work on paying off your mortgage, your equity will build, which, later on, can be used to your advantage. Then again, if you take out a mortgage young, the house should be paid off years before you hit retirement - provided you don't take out another loan down the line. By buying in your 20s, you also allow your property to appreciate. You could sell this property for a profit later on or use the money received to buy yourself a bigger home.

It makes sense to buy a house in your 20s for several reasons. One of them
is that there will be more time for your home to appreciate.

How to acquire housing while still in your 20s
Purchasing housing is doable even for the oldest members of Gen Z! Here is crucial information you must know should you decide to become a young homeowner yourself!
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Gather money for a down payment
Before you purchase a house and resort to seeking moving assistance through verifiedmovers.com, you'll first have to save enough money for a down payment. In a nutshell, a down payment is an amount you pay upfront to secure the mortgage. Getting a loan without it is, sadly, not possible.

The majority of first-time homebuyers are required to put down 20% of the home's value as a down payment. If we talk about a house that costs about $200,000 to purchase, that accounts for $40,000 you must pay at once! You could put down less than that, though. But in that case, you would be required to pay private mortgage insurance every month for the entire duration of your mortgage.
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Not having enough money saved for a down payment isn't a reason to give up on purchasing a property altogether. You could ask others for help, including your parents, or resort to applying for one of the down payment assistance programs. Either way, becoming a homeowner at a young age is possible, even if you aren't currently in the best financial situation.

To be approved for a mortgage, you'll first have to save enough money for a down payment.
Either that or apply for an assistance program.

Refinance your student loan
Are you still paying off your student loan? If so, you may be thinking it will be impossible to get a mortgage approval while in debt. But that's not true! Whether your mortgage request will be approved depends on your debt-to-loan ratio, which shouldn't exceed more than 36%. If it exceeds the set percentage, refinancing the student loan might prove the solution to the problem. By refinancing the loan, you prolong the period it takes you to pay it off, but as a result, you also get smaller monthly installments. These, in turn, allow you to make enough room for the mortgage.

Get someone with a good credit score to co-sign the mortgage
​If you wish to buy a house in your 20s, then you'll have to find someone with a good credit score to co-sign it! Unfortunately, the younger the person, the shorter their credit history. And the shorter the credit history, the higher the chance it isn't ideal. Most lenders require the score to be at least 660. If it is lower, you may have to wait a few months or a few years for it to improve. By having the other person with great history co-sign your loan, though, you should be getting approved without having to wait.

If you have a poor credit score, you'll have to find someone with a good score to co-sign your mortgage.

Start small
You've gathered the courage to become a homeowner in your 20s. That's a giant leap in and of itself! This being your first home ever, it's recommended you don't rush into investing in something big - something that you aren't sure you'll be able to pay off in the future. You are young, and this probably won't be the last house that you buy. With that in mind, think about starting small. Most people refer to their first homes as ''starter homes.'' They grant you entry into homeowner waters and allow you to stay in them for longer. They are typically cheaper properties. Ones that come with shorter pay-off periods and lower interest rates.

Set aside enough money for unforeseen expenses
There is a range of expenses associated with buying and owning a home. These include everything from a down payment, closing costs, various fees, monthly mortgage, property tax, and others. And while you should be familiar with the ones just stated, there are the ''so-called'' unexpected costs to be wary of. For instance, you can never know when something might go wrong in the house. And the older the property, the higher the possibility of something malfunctioning. That's why it's essential to set up ''a rainy day fund'' which you'll, later on, use to finance the necessary repairs on time.

The sooner you set up the emergency fund, the better. Some recommend you do it before you've even bought the property! That way, you'll be 100% prepared for unpleasant surprises if they happen.

Takeaway
​Although it's not precisely simple to buy a house in your 20s, it is something you should be able to do if you feel determined enough. However, before you go through with the purchase, make sure you talk to several professionals, including an experienced real estate agent and mortgage broker. They should provide answers to all the questions you may be having and guide the entire home buying process in the right direction.

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Sally Norton is a freelance copywriter based out of Miami, with a flare for writing optimized articles. Her experience is focused on moving, travel, real estate and overall guides to help people with some challenging projects and endeavors. In her spare time, Sally enjoys yoga and walks with her dogs - Mane & Rex.