Buying a home just feels so “adult”, doesn’t it? When you’re in your twenties, you might not feel like you are mature enough to take on such a responsibility. As it turns out, however, there are some advantages to being a homeowner early on, but more on that later. When it comes down to it, though, there is no right age but there are right factors that need to align for you to be able to do so and still live comfortably. You don’t want to become a homeowner at the expense of everything else in your life, so it’s best to thoroughly think and plan. Is there a right or wrong age to buy a house? We explore this below.
Study Your Income
There are plenty of online calculators you can use to plug in your salary and figure out if you can afford to buy a home and, if so, for how much and how much down. But a quick rule of thumb says that the majority of people can afford a home that costs up to three times their annual pre-tax household income. On top of that, if you have little to no debt and can afford to put 20 percent down, you might be able to buy a house worth nearly four times your annual income.
Analyze Your Next Five Years
The home experts at We Buy Houses Denver have found that if you’re not going to live in your house for three to five years, you’re probably not going to even recoup your costs, let alone make a profit. This might be more prone to be true of those who are younger and not yet settled, so this is always something to consider. Those who already have families and are ready to plant roots in an area might be better off in this regard.
Look at Your Debt and Emergency Funds
You might be making a decent wage but if you haven’t worked diligently to pay down your student loan or credit card debt, buying a home will be just another way for you to get further and further in the red. Also, if you don’t have a three to six-month emergency fund that will cover you in case of sudden unemployment or illness, buying a home is probably ill advised. While having debt and a lack of emergency fund is usually associated with the younger crowd, that’s not always the case. Plenty of middle-aged people are still fighting to get back in the black after some mishaps early on. This is all a matter of being able to comfortably afford a mortgage payment as opposed to worrying about scraping it together each month, which is no way to live.
How is Your Credit?
Again, bad credit is usually associated with the young (and, okay, perhaps a bit stupid) and, while bad credit isn’t insurmountable, it means that it’s not a good time to buy a home. Work on improving your credit before you even bother, as you won’t qualify for any loan worth its salt.
Your Finances Are Good; Are You Ready?
If you’ve looked at the above categories and are good to go, those who give tips on real estate investment will always tell you that buying a home early on can have its advantages. There is a lot of truth to the fact that rent money goes out the window, as it’s not an investment in any way. When you buy a home, you’ll be building equity and getting tax breaks—two very distinct advantages. Much like with everything else in life, however, there is something to be said for maturity. If something is telling you that you’re not ready, take a year or two to save, travel if you can, and get to a point where you are feeling settled. As mentioned earlier, doing this too soon and selling before you’ve recouped the money you’ve invested could do a lot of damage to your finances.
There is no set age that once you reach it, you need to buy a house. However, if your financial stars have aligned and you’re only in your twenties but feeling ready, go for it. You’re investing in your future and that’s never a bad thing.