A lot of young people think that they need to wait until they’re older to purchase a property, but that’s not necessarily the case. In fact, data has shown that millennials now make up 43 percent of most home buyers. This is the most active group in the real estate market, so if you’re a young person considering purchasing a home, you’re in good company.
Of course, a few things to keep in mind if you’re younger and looking to buy a property. Here are a few tips to help you get on the right track:
Save Up for a Down Payment
One of the biggest roadblocks to purchasing a property is coming up with a down payment. The down payment is typically 20% of the total cost of the house, so if you’re looking at purchasing a $200,000 home, you’ll need to have $40,000 saved up. It can seem like an impossible task for young adults just starting out in their careers, but it’s doable if you start saving early and stick to a budget.
There are a few creative ways to come up with the down payment. If you have parents or other relatives who can help you out financially, they could gift you the money for the down payment or co-sign on a loan with you. Another option is to get creative with your living situation and rent extra rooms in your house to help cover the monthly payments.
Either way, what’s important is that you start saving as early as possible to reach your goal. This way, when you’re ready to purchase a property, you’ll have the money you need.
Get Pre-Approved for a Mortgage Loan
The next step is getting pre-approved for a mortgage loan. Doing so will give you an idea of how much money lenders are willing to lend you and what interest rate you’ll be paying.
It’s crucial to compare rates from multiple lenders before settling on one, as even a small difference in interest can add up over time. You have many sources to look for a reliable mortgage broker, and some young adults even use online mortgage brokers.
Again, the most important thing is to start the process early so you can get an idea of what you can afford and how much you’ll need to save. Doing so can better plan your finances and make the necessary preparations. Thus, when the time comes to purchase a property, you’ll be in an excellent position to do so.
Be Realistic About What You Can Afford
It’s also crucial to be realistic about what you can afford. Just because you’re pre-approved for a certain amount doesn’t mean you have to spend that much. In fact, it’s often best to err on the side of caution and purchase a property within your budget.
This part is where working with a real estate agent can be helpful. They can help you find properties that fit your budget and meet your needs. It’s also important to remember that you’ll need to factor in emergency expenses, such as repairs, and the cost of furnishings and other necessary items.
You can avoid financial strain down the road by staying realistic about your budget and being mindful of additional costs. With this in mind, you can confidently purchase a property you can afford and enjoy for years to come.
Save for Closing Costs and Other Expenses
In addition to the upfront costs and mortgage payments, you’ll also need to save up for closing costs and other expenses associated with purchasing a property. These include home inspections, appraisal fees, and title insurance.
These fees can add up, so it’s important to factor them into your budget. Many young adults choose to use a savings account specifically for these kinds of expenses. You can also ask the seller to pay the closing costs, although this will likely increase the property’s purchase price.
Whatever your strategy, account for these additional expenses, so you’re not caught off guard when it comes time to purchase a property. By doing so, you can ensure that you have the money you need and don’t have to put yourself in a difficult financial situation and be forced to make sacrifices.
Purchasing a property is a big decision, but it’s well within reach for young adults willing to save up and do their research. By following these steps and working with trusted professionals, you can be a homeowner before you know it. So what are you waiting for? Start looking for your dream home today!