3 Tips To Help You Buy A Home In Your 20S
When it comes to adulting, it doesn't get much more real than purchasing a home. Being a homeowner comes with a great deal of responsibility and is a great way to solidify yourself as a financially stable adult.
Given the weight of the purchase, it's a task many people don't consider until later in life. However, you're not like everyone else and you envision being a homeowner in your 20s. If so, don't let anyone get you off course, you can secure a loan and purchase a home before 30. Learn what measures you should take to accomplish your goal.
1. Build Credit
Make sure you have built some level of credit before you apply for a loan. Lenders look at your credit report in the same manner that colleges look at your transcripts. While a transcript will tell an institution what type of student you are, the credit report tells what kind of person you are from a financial standpoint.
Whether you frequently miss payments or max your credit cards, this data will be present in your report. Work hard to build a healthy credit history that shows responsible spending habits and a good payment history.
2. Keep Expenses Low
Try to keep your expenses as manageable as you can. Lenders are only in the business of lending money to borrowers with whom they are confident will repay the money. When your expenses too closely match the income you bring in, it can send up red flags.
Additionally, if you have student loans, it's critically important that you keep your extra expenses low as student loan repayments and high expenses can quickly send your debt-to-income ratio so high that no lender will feel confident giving you any money.
3. Set Realistic Expectations
Ensure you have realistic expectations when you purchase your home. For example, if you're in your mid-20s and you've just started your first job after college, it's highly unlikely that you're earning a high dollar salary. For this reason, you might not want to apply for loan amount high enough to cover the cost of your dream home.
You should instead start off small and choose something more suitable for your income. Not only is this step a great way to improve your chance for a first time home buyer loan approval, but it gives you the ability to test the waters as a homeowner and grow into something larger as you age.
It's important to understand that home buying is a very personal process. What works for one person might not be necessary for someone else. Make sure you speak with a loan advisor to discover what is best for your particular situation.