When I told people of my plan to purchase a house 5 months before I graduated college, they looked at me with bewilderment and concern. “You’re doing what? Why don’t you be a normal kid and rent an apartment, travel, and establish yourself?” But I’ve always been one to throw myself into the fire, so that’s exactly what I did.
Everyone knows that the long-standing wisdom has been that owning a home is a great financial decision (if you do it right). So why have we suddenly decided that it isn’t and turned buying a house into some apocalyptic event? I believe the answer lies in modern society’s short-term views of our future. The majority of people these days seem to be running through life chasing instant gratification instead of long-term success. You see, the reality is that owning a home will probably save you hundreds of thousands of dollars over your lifetime, but in a fast-paced world, it’s hard to see that far down the track.
I hope that other young people will begin to open their eyes to the fact that they can still live the American dream. Owning a home may not be as far out of reach as you think.. But if you are going to be one of the youngest in line, you better be ready to accept and manage the massive responsibility that comes with it.
How I Bought a House as a Young Person
Buying a home is generally a stressful, tedious, and difficult procedure for any first-time home buyer, however it is particularly tricky for a young person. Banks require certain major qualifications including proof of a steady income for 2+ years with one employer. When you are rolling through college or your early 20’s, this is an uncommon occurance. However if you have a great credit score and the funds for your down payment, doors to purchasing a home begin to open. I have a very good credit score because we used my credit card to pay off big payments from the time I was 18 years old on through now, but that wasn’t enough.. I still did not have the funds for the down payment, so I decided to ask for help.
Many people believe that my parents just said “Happy graduation” and handed me a house.. What a far cry that is from how this actually went down.. The truth is I have accepted that sometimes it is better to ask for help up front in order to achieve your vision rather than struggle for many years to accomplish it on your own.
I was fortunate enough to have parents who were (upon my relentless pushing and proving the logistics of the numbers) willing to help me on the down payment, with the fact established up-front that it is now a debt I owe them. Past that I have been on my own; but my home is my pride and my motivation– it pushes me daily in a way that renting never could have. This is my home and I am responsible for paying the mortgage along with the bills (& everything else) every month for the next 30 years.
Regardless of what you do, if you break from the crowd, people are going to belittle your actions.. so let them talk, put your head down, and keep pushing for your dreams.
Finding The Perfect Place: Do your homework.
A home is one of (if not the) biggest purchase you will ever make.. So you certainly do not want to settle on a house that isn’t exactly what you are looking for. I put many hours and late nights into researching the Fort Worth market, looking into different areas, checking the price of rentals in surrounding homes, etc. Knowing the different components that make up a “good investment”, a “good deal”, or a “good location” are invaluable skills. As with anything, knowledge is power, and I spent countless hours crunching numbers at home and driving around neighborhoods to find the perfect home.
I looked at so many houses, but many were just too far out of reach or would require far more rehab than I could afford. When I finally found my home, I knew it the moment I walked in the door. Most people would have turned their noses, but I saw massive potential and looked beyond its “ugly” to what it could be.
Choosing a house that needed a little updating and TLC, in an up-and-coming, centrally located area, and renting out my two spare bedrooms while I’m young has been one of the most terrifying, but wise investments that I could have ever made. The home buying process was overwhelming, emotional, frustrating, and seemingly never-ending… But I learned that it is all worth it when you’re handed the deeds to your home. You gain the pride of being able to know and say, “I bought a house!”
This is what I have gained and realized from purchasing my first home.
Security and Stability. In a crazy world where everything seems to be constantly changing, it’s incredible to know that you have a place that no one can take away from you– (unless you don’t pay your bills of course). When you own a house, it is so much more than that.. It’s a home that you can always return to and find peace. There will be no more packing up boxes and moving each year and no uncertainty of where you will live next. When you own (vs. rent) you also feel more inclined to get involved with your community and build relationships with your neighbors. I love sitting in the backyard and talking to my neighbor while our dogs play between the fence, talking to people in my neighborhood, and witnessing this old neighborhood being updated and beginning a new chapter.
Massive financial responsibility leads to massive motivation. When you own a house, everything that comes along with home ownership now falls on you. After living at home my senior year of college, I felt like I was hit over the head with a load of bricks when the first round of bills and the mortgage payment hit my bank account. Stepping straight into home ownership at such a young age has pushed me to rise to the occasion, make sacrifices, and work my hardest to ensure that I can cover all of the costs that come with owning a home. I knew that I had no time to waste once I made this purchase, and I had to formulate a plan of action as to how I was going to make enough pay the bills and maintain my home. Once I made enough to just survive, it has pushed me to work harder and accomplish more, so that I can continue updating the home and someday buy more investment properties.
Prepare to grow up fast. I decided to start early and buy this home knowing I would rent out my 2 spare bedrooms until I got on my feet and became financially stable. Renting out bedrooms is great to help offset bills and keep life do-able as a young homeowner.. But it has also turned me into a landlord seemingly overnight. If anything breaks, I get the phone call and it is my responsibility to fix it. The reality of owning a home is things break, life happens, and the costs all fall to you. You have to be prepared to step up to the plate and be a landlord even when you feel you aren’t necessarily old enough to own that role. Be proactive and set aside funds to deal with things going astray or breaking… because they will.
Life starts to give back. Mortgage interest and property taxes on your primary residence are deductible from your income tax, meaning I get to keep more of the money that I work so hard for, instead of sending it all Uncle Sam’s way. Plus you’re no longer paying large payments every month only to see nothing in return, you are paying off your mortgage and building equity in an asset of your own.
Budgeting is life. My budget binder helps me keep track of my income, expenses, savings, bill due dates, etc. — yes, it’s a physical 3-ring binder, I’m old school. You must begin closely monitoring exactly where your money is going and you will have to make sacrifices.. Many of the “fun” things such as traveling, going out to eat, or going out with friends has to be pushed to the wayside and take the backseat to your home expenses. Buying a home truly just depends on where you are in life and where your priorities lie. Owning a home is an investment in your future, but it also means you will live a much different life than most of your young peers today.
Get a Head Start. Getting a mortgage is all sorts of fun. The process can be grueling, emotional, and seemingly never-ending. And after finally obtaining my mortgage, I am now six figures in debt at the ripe old age of 22. This can be good or bad depending on your perspective. If I were to only pay my required payments every month for the next 30 years, I would be debt-free on this home by age 52. Today that seems like a lifetime away, but had I waited until 32 to buy, I would be 62 by the time I got this house paid off. I feel that the strongest financial asset a young person has is time, so don’t waste it. Start building equity as soon as you can.
Prepare for the Future. Any way you look at it, owning a home can provide you great financial security down the road. You could sell the home when you are ready to move onto something else or rent it out for many years as a source of supplemental income.
Buying a home is certainly not for everyone, but if you are planning on staying in one spot for at least 3-4 years, are prepared to make sacrifices for your home, and feel that you are ready for taking on that responsibility, it is a wise option to look into. But when you take the jump you must be prepared to find your wings fast and you have to want it bad. If buying a home is not at the top of your priority list, you will not be able to handle the headaches, commitment, and unforeseen expenses that accompany being a home owner, and you may grow to resent your decision.
For those who have hoped or dreamed of buying and hold home ownership high on your priority list, I hope you realize that the American Dream is still alive… If you formulate a plan to open the door to purchasing a home, you can achieve an incredible milestone with massive long-term benefits.
Have you bought or considered buying a home as a young person? Share your thoughts and opinions in the comments below!