Should Young Millennials Rent Or Buy A Home?
Millennials are becoming smarter than the previous generation. With the help of latest social media awareness and access to internet, this generation is well equipped to choose the best. There is galore of information available on personal investing, new technologies, stock prices, commodities and nevertheless real estate roaring prices. It’s probably the hardest decision to make when it comes to housing for them. Should they continue to rent an apartment or is it time to buy a home? It used to be that you grew up, got a job, got married, and bought a home. The rites of passage today aren’t so clear cut. Today, young people below the age of 35 are taking longer and longer to buy homes. The recession hit Millennials the hardest, and only now are some reaching the financial stability needed to settle down. They’re getting married later, having kids later, and putting other priorities ahead of buying a home. At some point, however, this trend will fade. As Millennials begin to settle down, more are wondering when the right time to buy a home is.
Don’t Feel Pressured to Settle
First, remember there’s no rush to buy a home. Whether you should purchase a home or not depends heavily on your own financial situation and goals. Unlike our parents and grandparents, there is no singular time in life to buy. Homes will always be available, so take your time to make this decision.
Analyze Your Financial Situation
You may want to hire a financial advisor for this one. If it’s always been your dream to own a home, it helps to know if you’re on the right track. Ideally, you should have about 20 percent in down payment at your disposal in order to purchase a home. A financial planner can help you meet your goal by plotting your path based on your income and expenses.
If you want to buy with less than 20 percent down, you’ll have to take on Private Mortgage Insurance, or PMI. Buying without 20 percent down isn’t a bad thing–in fact people sometimes take on insurance in order to take advantage of the current interest rate and property value in the area. If you invest in a PMI, you’ll likely add the cost to your overall monthly mortgage payment.
Be honest about your financial situation and whether buying is a wise option for you at the moment. 20 percent down is a hefty payment, and paying less will raise the interest rate on your mortgage.
Decide What You Can Afford
Never buy outside your means. This means you need to be realistic about what you can afford while still supporting yourself. A general rule you can use is to budget a home that’s no more than about 2.5 times your salary. Take into account your take-home pay, current loans, credit card debt, and your family. After you calculate your down payment amount and mortgage, decide whether it’s an appropriate time to buy. If it seems like a stretch, it may make more sense to save your money and wait.
Don’t be intimidated by the Housing Market
Don’t let the housing market get you down. The market will always rise and fall and values will change. If your primary desire is to own a home for yourself or to raise a family, just focus on saving for what you want. The key is to invest wisely. If a mortgage or deal seems too good to be true, it probably is. Be sure to do thorough research on the property and your financing options to get a reasonable rate.
If you want to own a home one day but you don’t have the funds, don’t fret. People are renting longer than ever, which means landlords compete for tenants by making their units nicer.Renting is a good time to build credit, savings, and a plan for the future. There are companies that offer credit checks tenants can use to help them remain on the right track. Updated amenities open living spaces, and environmentally friendly features are just some of the things that make renting so enjoyable. Rent in a community that you like while you save up for your dream home.
Buying a home is a big decision, but when you’re ready it can be a great investment in your future. If you think you’re ready to buy a home, analyze your finances carefully and hire an expert to help you plan.
Do share your thoughts about these tips and what advantage it will have for anyone to buy home comment section below.
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