Advice on Buying Your First Home in Your 20's
It has officially been one year since Kunal and I bought our first home together. The process of buying a home has been a really great learning experience for me (it was my first time, not his) and really threw us into the world of #adulting. I realized my life had changed when I would rather go shopping for house stuff over clothes, I never thought I would see the day.
I find now a days it is hard for people to put enough money together to own a home in their 20’s because it costs a lot more to do so today versus when our parents were buying their first homes. People are in school longer, moving around a lot more than they used to, and getting married later which all adds up to less people our age investing in homes. That being said, Kunal and I were able to buy our dream home after being in the full-time working world for 5 and 4 years respectively (him and me).
Yes, I waited until I got married to invest in a home, but married or not, I think owning a house rather than renting is a great way to save money and set yourself up with a valuable asset for the future.
Here are some steps we followed:
1. Build Your Personal Credit
You should start building your credit from a very early age – before you even think about buying a house. I worked at a bank throughout university so I learned this one very early on. A good credit score will help you get financing for any houses, or even businesses you want to pursue later in life. This is really invaluable – if you don’t have good credit you can be in a tough spot for securing any sort of financing from the bank.
You can start building credit by opening a bank account, getting a credit card or a small overdraft on your bank account and ensure you are paying down what you’ve spent every month on time.
2. Get a Mortgage Pre-Approval
The bank will check your annual income and credit score and tell you how much money they can potentially lend you for your home and give you a “pre-approval” on a mortgage. This can be really valuable to put your home search into perspective.
Once Kunal and I were pre-approved for a mortgage we then knew how much we could spend on a home. We were able to narrow down what neighborhoods and size of house we could afford based on the amount the bank was willing to lend us and our personal savings. We then only looked at homes in our price range with our realtor, that way when we found one we loved, it wasn’t a question of “can we afford this” because we already knew what we could afford.
3. Save Save Save
Aside from being approved for a mortgage- you have to be able to come up with that 20% down payment:
- Before we got married, I lived at home with my parents so I could save on living expenses
- Have a side hustle. Kunal and I both have our own side-hustles aside from our full time jobs. Even if it’s something small – like blogging for me, you would be surprised how it can add up over the years and help you make those big purchases when you need it
- Make a budget for yourself. You would be surprised how much spending a little bit of time creating a personal budget for yourself helps with saving money. We still do everything we want to do – go on vacation, eat out, go to movies, and even go shopping – it’s just informed and controlled spending.
4.Be Smart – it’s an investment
Owning a home is an investment. Do your research about neighborhoods and the housing market where you live. Be patient, and buy when it’s the right time. Home buying isn’t something you want to jump into. You could potentially have to hang on to this place for at least 3-5 years so think long term. You want whatever you are purchasing to go up in value, so doing your research is very important.
Buying your first home can be pretty scary but liberating at the same time. It’s something I definitely recommend doing in your 20’s as a learning experience. Buying real-estate is something everyone will have to do at least a few times in their life; you might as well get started as early as you can so you can get good at it.
Aside from searching and purchasing our home, my favourite part has been interior designing our home together. We are taking it really slow, and even a year later a lot of the house is still unfurnished. I am okay with that, I’m taking it slow and making sure whatever I do is in our budget and fits us as a couple.
Have you bought a home in your 20’s?
I would love to know your experience.