Most people who are planning to buy their dream property often wonder when the right time is for them to buy their first house. According to reports, 45 years old is the average age for homebuyers in the United States, but about 26 percent of buyers are also in their 30s.
You can own a house upon reaching the legal age, which is 18 years old in some parts of the world. This allows you to sign legal documents and complete transactions without the aid of a co-signer.
However, a co-signer is necessary if you’re below the legal age.
When it comes to buying a house, you need to know your financial health because it will determine whether you can afford to make your mortgage.
How to Evaluate If You’re Ready to Own a House?
A home purchase is one one of the biggest ticket items you’ll buy. Even those who are in their 30s or 40s still have to take a lot of factors into account before diving in. Why? A mistake could mean financial problems along the way, and for some people, foreclosure.
So before you start shopping around for a craftsman-style home or a condominium, see if your current situation ticks all the boxes,
- You can get approved for a loan.
- You’re ready to take responsibility for owning a home.
- You can maintain your home.
- You can meet the recurring expenses of homeownership like monthly payments.
- You can keep the home long enough to recover transaction costs from buying and selling.
Signs You’re Ready to Buy a Property
Once you’ve ticked all of those boxes, dig a little deeper. The idea here is to get more details out of your situation in life. Yes, you can get approved for a loan. But what makes you answer in the affirmative?
Let’s look at the following:
- You have a stable source of income. Owning a house doesn’t mean you’re free from future costs and payments. You’ll need a stable income to pay for your property taxes, homeowners insurance, maintenance and other expenses that come with home ownership..
- You have a good credit score and history so that loan companies can qualify you for mortgage financing. A good score and history means more affordable mortgage rates, which means you won’t have to worry about those monthly payments.
Financial stability, however, is not the only consideration.
- You’re ready to plant some roots. When you’re buying a home, you need to be certain about the location. For example, you’ve lived in Nashville for a couple of years and see yourself living in the city for several more years.
- You want to customize your space. Renting an apartment’s fine, but you can’t do much to make it your own and reflect your personality.
If you’ve covered all these factors, then you’re good and ready to buy a house.
What Reasons Would You Have to Buy a House at a Young Age?
Owning a property in your 20s seems like a dream that you should be doing in the future. Usually, people would focus on their careers and going through adulthood. House acquisition is a challenging process and this also prompts people to plan it in their older years.
Buying a house will always be challenging and expensive. But sometimes, it’s better to buy at a young age than to wait a few more years.
Price appreciation is one of the many reasons a house is a good investment. The property value will always increase as time goes on. When investing in a new house, appreciation should be at the top of your list.
Although U.S. home price appreciation continues to increase overtime, you should always consider elements that would affect the price of your home if you plan on selling in the future. Some of these elements include neighborhood, location, supply and demand, and future developments.
If things go according to plan, owning your own property should increase your net worth. You’ll be saving money, and instead of paying a landlord, you save a portion of the payment which you can use for your other needs.
A Place of Your Own
When you own a house, you’ll always be the one in charge and responsible for all the decision making. You can customize the appearance to suit your taste. It’s up to you to make improvements that will add value in the future and you won’t need the approval from a landlord.
Note that you should do your own research about the local rules and regulations about what you can do to the property before purchasing.
Your credit history is crucial to get loans and buy insurance. But you’ll need high credit scores to borrow large enough sums. Paying your mortgage on time is an effective way to increase your credit and establish a credit history that will be attractive to loan companies.
You’ll Be Living a Mortgage-Free Life in the Future
If you buy a home in your 20s, you’ll have plenty of time to pay for your mortgage. That also means more affordable rates. If you were to buy late in life, you may be forced to choose from shorter-terms and higher rates.
Reasons to Wait Before Buying a House
But you shouldn’t feel rushed to buy a house. It is a good investment, and sometimes, waiting can pay off as well.
- If you move around a lot because of your job, buying may not make sense.
- If you’re still paying off a loan, adding another loan to pay off would place undue stress.
- If you’re worried about job security with a baby on the way, your current finances may not meet mortgage requirements.
- If it’s a seller’s market, home prices are likely to be higher. And the properties you’re looking at have multiple bids.
A home purchase is not just a big financial decision; it’s a major responsibility. If your current situation in life is not matching up with a desire to buy a home now, wait it out.
Ready to Buy Your New Home?
Gorgeous homes with “for sale” signs in a market that swings for buyers is always tempting. You want to just go to an open house and make an offer right away. But because this is such a major undertaking, it’s worth thinking about it and talking about it with the family.
Once you’ve worked out all the details and determined you’re ready, start the search and work with the right agents to find the right home for you.