When is the best time to buy a new home? Should you purchase a home when you’re young and fresh out of college? Or should you wait and rent an apartment until you’ve saved up for a substantial down payment? With government loans and a good job after college, buying a home in your 20s can be a great investment. However, homeownership is not for the faint of heart. Here are a few things to consider and think about to see if you’re really ready to take that big step.
Problems With Pests
If you rent, all you have to do is make a phone call to your landlord to request pest removal service. But, surprises await for every homeowner. Even if your home passed a pest inspection, new critters can quickly invade and make their presence known. Some common home invaders include:
- Spiders
- Fleas and bed bugs
- Bees and other flying insects
- Rats and mice
- Ground moles and groundhogs
Eradicating underlying pest issues can become a hassle, and generally require professional assistance. Experts in critter control similar to pest control Orange County specialists are available nationwide and around the clock to help you control and battle pesky invaders. Keep in mind that pest control fees can put a dent in your budget if done in a reactive rather than proactive manner, so be sure to stay on top of a bug problem rather than wait till it morphs into a full blown infestation. Otherwise, a 20-something’s first go at homeownership could turn into an expensive and traumatic experience.
Hidden Costs And Fees
Your mortgage is clearly one of the biggest investments you’ll ever make. Over time, you can build a substantial nest egg that leaves you with enough equity to make a clear profit on a sale if you wanted to. Are you still renting? Maybe you’re still trying to decide whether or not making a home purchase is the best option based on a pre-approval that you have from your bank. Your rent payment generally never changes month to month, but at the end of your lease, it could increase based on cost of living and upgrades in your complex. So if you don’t mind a payment that stays the same each month, along with the rest of the utility bills, renting may be best for right now. If you’re ready to take the plunge and start putting money back into the equity of your own home, it’s important to keep in mind the hidden fees and extra costs associated with home ownership. Some possibilities include:
Home repairs and upgrades to your home and appliances
- Tax increases and adjustments
- Home inspection, survey and appraisal fees
- Closing costs
- Prorated taxes at closing
- Homeowners insurance, including flood insurance
- Fees including tax service and lender origination fees
- Filing fees
Most of these are extraneous fees you’ll need to be paid before the final closing on your home. Keep these in mind as you build your savings in your 20s for your future home purchase.
Locking In Your Payment
Owning a home means you can generally lock in your payment at closing, unless you purchase an adjustable rate mortgage. An adjustable rate mortgage is a great way for young homebuyers to get into an expensive home for a fraction of the cost, with a low upfront monthly payment. But over time, as interest rates rise and fluctuate, so can your payment. If you like to know exactly what your house payment will be every month, acquire a fixed rate loan or continue renting your current space. Keep in mind that you’ll have to put at least a 10 to 20 percent down payment on your mortgage, unless you have a special interest or government-backed loan, which may be 0 to 3 percent. But on the upside, the more the down payment, the lower your monthly payment will be on a fixed rate.
The Cost Of Upkeep
Other things to consider with homeownership include lawn care, homeowner’s association fees, and weatherproofing your home throughout the years. It may seem like a small amount at first, but costs can fluctuate as inflation occurs. Lawn care can be expensive, especially if you have to hire someone to mow and trim your weeds. Driveway upgrades are another thing to consider. Even with a newly paved driveway, it should be maintained annually to avoid cracking and buckling. Low-lying areas that accumulate water can damage your foundation and other areas of your home. Installing proper waterproofing methods and providing proper drainage can rack up monthly upkeep costs if you buy a place.
While your dream right now in your 20s is to eventually own your own house, you still have plenty of time to save and plan for the perfect place as well as any extras that may pop up. However, if buying now is an irresistible option, just remember home ownership requires a nearly constant ability to stay on top of problems before they manifest into something which truly threatens your investment.
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