4 Reasons Why You’re Not Too Young to Buy a Home
If you’re in your 20s and still paying off student loans, buying a house might seem like an unreasonable or even crazy idea. But with rents on the rise, more and more young people are trading in their leases for mortgage agreements. In fact, Millennials aged 18 to 34 have accounted for the largest group of homebuyers for the past three years. Here are four reasons why you should join them.
Owning Can Grow Your Savings
You don’t have to hand over all the money for your new home at once. If you’re looking to buy a $140,000 home, a 15% down payment comes out to $21,000. That’s a fair chunk of change, and it might not feel like savings. But over the long run, your mortgage payments could be turn out to be much cheaper than your monthly rent. Plus, with a fixed-rate mortgage, you can count on stability. Your rent won’t go up, because you won’t be paying rent.
You’ll Gain Equity
Even if your mortgage payments aren’t lower than your rent, at least you’re getting something back: equity in your home. With each payment you make, you own a little more of your home — which is money that will come back to you if you ever sell. You can also borrow against your home equity, which can come in handy if you need to finance a large purchase.
You’re Not Trapped
One advantage of renting is that you can change your plans relatively quickly and painlessly. Bad breakup? Sudden career change? Renters only have to wait out their lease — or break it — to make a change. To many habitual renters, ownership looks like a ball-and-chain. But it doesn’t have to be. You can always sell — and if you sell for a profit after three years, you can avoid paying a capital gains tax. No, it’s not a month-to-month lease, but if you know you’ll be living in your current area for over three years, ownership can be a smart (and flexible) decision.
You Don’t Have Kids (Probably)
Millennials are waiting longer to get married than any other generation in history, and similarly, many are waiting even longer to have children. In terms of home buying, this is a very good thing. When you have kids, your ability to build up your savings account is impeded — those babies aren’t cheap. Having already made the large purchase, and having already started reaping the monthly savings benefits, can be a financial advantage if and when you do decide to grow your family.
Sam Radbil is a contributing member of the marketing and communications team at ABODO, an online apartment marketplace. ABODO apartments was founded in 2013 and is headquartered in Madison, Wisconsin.