I’m hearing a number of people can’t afford a down payment for a home – specifically millennial’s. And it’s heartbreaking to hear how much debt current generations are in compared to older generations. I was there once, in fact I never thought I would be able to own a home.
And I get it – you wonder well what to do. I think there’s two ways to look at it.
Making the Decision to Own
Certainly the pinnacle for most is owning a home, that you can call yours with no restrictions and filled with your personality and goals of having a family.
But it’s not just a down payment you have to worry about, but the closing cost and any immediate and ongoing maintenance cost.
Unless you and or your partner can financially handle ongoing costs associated with owning a home while meeting your normal lifestyle expectations then you should wait until that becomes more secure.
Some people may not be aware of this, but while there are many homes out there, many are not in a move-in ready condition. And if they are they require more expense, or you have to consider the neighborhood and location from stores, your job etc.
So, what to do? Well, this is the time where saving and ensuring you have a good credit score comes into play.
The thing is – some don’t realize that by really doing your part in paying your bills on time can allow great benefits in the future: lower interest on credit cards, auto loans and even a better loan on your mortgage. But given the current climate condition of the workforce with salaries and hourly wages it’s not as easy to remain as one who pays on time or is not overloaded with debt.
But I recommend however you can, albeit minimizing the spending, walking or spending time outdoors instead of going to a movie. All those small changes add up. It took me a few years because of my student loan debt but I remained diligent and focused.
Deciding to Rent
Renting is not a bad thing although in some areas it has really gotten out of control. Just read this article here – I was shocked. This guy is making $100k and can’t afford the rising cost of home ownership.
I say renting is not bad because at least all of the burden of maintenance is put on the shoulders of the owner. And there are not many good owners out there, but depending on the cost you can find really nice places to rent, and live in for however long the lease allows while being able to save.
This is the time where you want to save up for your down payment and use it as a means to know what area you would like to live in. This is what some of the celebrities do. And I am always intrigued to study their habits because they are rich for a reason and they have a team of advisors guiding them on those decisions.
You also have the flexibility of leaving in case you decide a location is no longer meeting your standards, you can’t easily walk away from a house.
Furthermore – you don’t need a ton of money to buy a house. That is why there are programs of all types to help individuals buy a home. You may only need to put down 3.5% or leveraging the knowledge an skill set of your realtor is key to help you negotiate minimal closing cost by having that fronted by the sellers if possible.
So while I do realize there are many financial reasons causing most to not own a home, it’s important to research or ask of what you don’t know to see how you can be helped with any programs available to start you on the journey of home ownership.
Use renting as an advantage to observe and familiarize yourself with your must haves or checklist. Whether it’s the location or amount of bedroom space, all is valuable in experiencing so you can find the right home necessary for you.