LB Note: This week's post is a syndication of a piece I wrote for LendingHome. This article has been lovingly republished with permission. Have a great week!
We get it, buying your first home can be nerve-wracking. There are the obvious financial considerations, like saving up enough for a home you are excited about, but there are also lifestyle considerations not many people talk about.
Concern #1: “Buying a home means you give up freedom.”
We beg to differ. Sure, buying a home may mean in theory you’re “tied” to a location, but buying a home can lead to an even greater freedom: the financial kind. While renting has advantages, when you pay that rent check, you’ll never see that money again. Future equity in the home takes time to build, so the earlier you start, the better.
If you suddenly get a wonderful job offer out of state or decide you want to pack up your life and travel for 6 months (wanderlust is calling), owning a home won’t stop you. Renting to long term tenants or overnighters is easier than ever thanks to platforms such as Airbnb, Cozy.co, and Hotpads.
Concern #2: “Buying a home could make me house poor.”
If you’re reading this, it means you’re (likely) invested in learning about the homebuying process and won’t find yourself in this situation. Realistically, those who end up house poor end up that way because they buy too much home for their budget, spending too much of their take home income on housing costs.
The fix for this is threefold; be sure to shop within your budget (30% of take-home income is the recommended amount to spend on housing costs), estimate ongoing monthly expenses, and do your research on the age of high-price items in your home, such as the water heater and roof. Want to dig a bit deeper? Check out our top considerations for understanding how much how you can afford here.
Most importantly: You may qualify for a $200,000 home, but that doesn’t mean you have to spend up to your maximum amount.
Concern #3: “I shouldn’t buy a home because I’m single.”
We think it’s never too early to start building equity. As trends go, because more millennials are forgoing homeownership until their 30’s (the average age of the first-time homeowner is now 33), many end up buying homes after marriage, contributing to the notion that homeownership is only for the coupled-up.
While many millennials believe they can’t afford a home without a partner’s contributing income, it isn’t always the case. In fact, buying a home early may improve your financial status (see Concern #1). Additionally, as interest rates rise and the housing market becomes increasingly competitive, the time to buy may be now – instead of when hypothetical Mr./Mrs. Right comes along in the future.
Of course, the best way to combat homebuying anxieties big and small is to fully educate yourself on all the ins and outs of the homebuying process. I wrote a book about it, here.