6 Tips for Buying a Home in Your 20's

By: Christopher Toste

6 Tips for Buying a Home in Your 20's

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Buying a home may seem like something that is hard to achieve especially in your 20s; however, it isn’t impossible with the right mindset and determination.

Many may argue that Millennials are forgoing home ownership for two reasons. The first one is that they wait until marriage as at that point, they probably have a better idea of where they want to live, stability in the workplace, etc. The second one is they value low-key, low-maintenance lifestyles. Home ownership often doesn’t fit this value point. But in reality, owning a home is still a great investment for building your personal wealth. Here are some tips on how to make home buying achievable.

  1. Location
It is important to know where you want to live. Ask yourself where you would like to see yourself living in three to five years. Once you figure out the location, you can better determine how much you can afford.
  1. Credit
When you are in your 20s you may have low (or no) credit, which means you will have a hard time getting approved for a mortgage. If you have zero credit, try opening up a credit card with a small limit, and pay it off every month.

If you have established credit, be sure to review your credit report and keep your balance at 30% or below your credit limit in order to boost your credit score. It is also important to ensure that your balances are always paid on time.
  1. Pre-Approved Mortgage
It is imperative to get a pre-approved mortgage to see how much you can afford. A tool that I like to use is the Mortgage Payment Calculator. This tool will let you see how your monthly payment would be affected, depending on your interest rate and down payment. I also suggest to speak with a mortgage advisor.  

There are also many first time home buyer programs that you could possibly qualify for such as the First-Time Home Buyers’ (FTHB) Tax Credit, Home Buyers’ Plan (HBP), and GST/HST New Housing Rebate. It would be important to look into these as you are getting a pre-approval.
  1. Save, Budget and Track
Once you know how much you can afford for a mortgage, it is time to think about a down payment. Keep track of your expenses and see where you can trim your spending. Budget yourself and save aggressively.

This will be the most important step to buy a home in your 20s. Keep a goal in mind of how much you want to save a month and put aside this money consistently for six to 12 months before you want to buy. This will help you build up your down payment fund. Keep in mind that you will also need extra money for closing costs.
  1. Research and Plan
It is important to do your due diligence in your research. Read press releases and news articles about activity in the area that you are interested in. Also visit the neighbourhood that you are interested in to make sure it is what you are looking for and of course make sure you can afford a home in that area. Do this so that you are not surprised by anything once you move in.
Plan appropriately and timely. Don’t rush yourself through the process.
  1. Don’t Buy If You Can’t Afford

This is key to remaining a 20-something homeowner. When you have a low salary, large student loan payments (if any) and other variables in your budget, it’s important to buy a home you can comfortably afford. Don’t forget to account for the expenses that would be added to your budget with a home such as mortgage, taxes, insurance and maintenance. Also keep in mind that just because you were approved for a certain amount, you do not need to purchase up to that limit.
Home ownership is smart, but it can be expensive if you don’t prepare.

With these six tips on hand and preparing yourself the best way you can, home ownership is possible in your 20s.If you have any questions or need help coming up with a plan, just give me a call as I am ready to assist you.

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