It’s no secret here on Making Sense of Cents that I am a homeowner.
However, what some people might not know is that I bought my home at the age of 20.
Yes, I was TWENTY YEARS OLD.
I know this isn’t the norm for most people, and I know that just because some are able to do it and make it work doesn’t mean that it’s for everyone. Most of my friends bought homes when they were around my age as well, so maybe it’s a St. Louis thing? 🙂
Anyway, we both had okay full-time jobs at the time. Buying a house at a young age was possible for us.
We moved into our home in October of 2009, and I graduated in May of 2010, so we did buy our home thinking that we would have a higher income coming May 2010. Luckily, that worked out in our favor, but I don’t think I would ever recommend buying on an expected higher income unless you knew for sure (150%!) that it would happen.
We bought in 2009, when there was the $8,000 first-time homebuyer tax credit and when the housing market was cheap for buyers. Also, buying a home where I live is cheaper than renting, so that was something that definitely influenced us.
Before we bought, we were renting a house (for super cheap – like $350 a month, if I remember correctly) but had to move because we had a crazy neighbor who had the SWAT team at his house on a monthly basis and he started to threaten our lives as well (some of you know exactly how that ended – not good at all).
Also, I found a snake in my bed one night (yes, an actual SNAKE!) and I was pretty much scared to sleep in that house ever again because of the neighbor and the snake.
Even though we were both very young, houses were a steal at the time, and we needed a new place to live.
Here are my tips to help you buy your next home. If you want to buy a house at a young age, or any age, there are things you might want to think about.
Do you actually want to buy? Or should you rent?
Before you decide that you absolutely want to buy your next home, you should stop and think about the positives and negatives of both home ownership and renting. Not everyone is meant to be a homeowner. And not everyone wants to rent.
Some different things that you should think about include:
Do you want to travel a lot? If you want to travel, then having a permanent home where you have to pay the bills even if no one is there may be a waste of money for you.
Do you plan on moving for your career? If you are young, then you may still be early in your career and you may decide that you want to leave your home city one day. I actually was offered a position right after I graduated from college (around 6 months after we bought our house) and they wanted me to move. Luckily, the position kind of sucked and the town they wanted me to move to sounded absolutely horrible (I think there were around 100 people that lived in the whole COUNTY of where the position was located) so I didn’t give the position any thought.
How’s your credit? If you are young, then you may not have even established any credit. It would be very hard, if not impossible, to buy a home without a good credit score.
Do you have time and/or money for home maintenance? If you own your home, then there will be home maintenance that goes along with it – it doesn’t matter if your house is new or old, stuff happens. Something may break, grass needs to be mowed, and so on.
Read my past article Is A House Right For You for more information.
What kind of home do you want?
Each person is different. Just because the “American Dream” is said to be a suburban house with a white picket fence, doesn’t mean that it’s everyone’s dream.
You should really think about where you want to live and what kind of home you want.
Do you want to live in the suburbs? Maybe you want to live right on the beach? Or is city living more for you? Or do you want to live far away from everyone and live 20 minutes away from the closest grocery store?
Do you want a house, a condominium, a townhouse, a duplex, a farm, or something else? Maybe you want to live on a boat? I don’t know! There are so many different options out there
Find a realtor.
If you are buying a home, please find a realtor! I have met a few people who think that they have to pay the realtor if they are a potential homebuyer. That is not true.
The realtor receives a commission from the seller, at no cost to you. Or at least this is how it is in the United States. Can others in other countries chime in about this?
There are many positives of having a real estate agent. They can help you negotiate (they are professionals at this), they can help you find the perfect home for you, they have experience in buying homes, and they can help you with all of the paperwork that will need to be done (and trust me, there is so much paperwork!).
Think about the total cost of the home that you want to buy.
This is something that some/many people do not think about when they buy a home. When you buy a home, there are so many factors that go into how much a home truly costs.
These include:
The home price. This is the number one thing that potential homebuyers look at, but don’t forget about the below!
Utility bills. You would be surprised to see how much utility bills can vary. One home may have utility bills of $200, and another may have utility bills of $700. You should be able to get a detailed past expense list or at least a realistic estimation of how much utility bills will cost you for that specific house from the current homeowners.
Private Mortgage Insurance. If you didn’t put a 20% down payment on your home, then you may have to pay PMI.
Property insurance. Insurance can vary greatly depending on where you live and what type of home you have. I pay around $700 a year for property insurance, but I know others who pay over $2,000 a year.
Property taxes. This can be a rather large amount of your monthly mortgage each month. I pay around $150 each month towards property taxes, but I know others who pay over $500 each month (and that is just crazy to me!).
Maintenance. Things will break in homes, like I said earlier. Also, you may need to paint eventually, mow the lawn, buy more efficient appliances, and more.
Rent out a room in your home for some extra money.
I wouldn’t recommend buying a home unless you can truly afford it. However, if you are young and there is plenty of extra space in your home, then it probably wouldn’t hurt you to rent out some of that extra space.
Renting out a room in your home can add an extra few hundred dollars to your income each month, which can be really helpful if you are a homeowner.
We have four bedrooms in our house and we only use one (our bedroom). So when my sister needed a place to live a few years ago, we invited her to live with us. It’s been working out very well. She’s been living with us since May of 2012 and pays around $325 per month.
We also haven’t really noticed an increase in any of our bills, but with some renters you may notice that. It’s always a good idea to try to estimate how much things will increase, wear and tear, and more in order to see whether renting a room in your home is worth it for you.
Read Debunking 5 Myths About Renting out a Room to a Stranger for more information.
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