4 SECRETS TO BUY A HOME IN YOUR 20S

Buying a home is an important financial decision.  According to a survey, 4 out of 5 members of Generation Z (including those born after 1997) definitely want to own their home.  And they are twice as likely to save or plan to save to buy a home by the age of 25 than other generations.

Buying a home before age 30 is an achievable goal, but it requires some detailed plans.  If you're wondering how to buy a home in your 20s, here are the most important things you need to plan.

1- Determine which type of house you want to buy and where it is located

In real estate, location is paramount and especially true to buying a home in your 20s.  What you have to consider is how long you plan to live in that area.

As such, you need to consider if you change jobs in your 20s, consider whether it's easy to sell your home quickly.  If you don't see any immediate work change, think about what you need at the place where your future home located.  For example, would you like to be near shopping and restaurants?  Do you want to live in an area that is walkable or allows you to ride a bike?  Do you prefer the suburbs or the city?

Buying a home in your 20s also means deciding what kind of property to buy.  For example, buying a planned condominium or townhouse has its own advantages.  It can be less expensive than buying an individual home as things like exterior maintenance and lawn care are usually handled by the property management department.

You may want to find an old house and renovate it yourself.  Or you prefer a home that's ready to move in and doesn't need any extra work.

2- Assess your financial ability

The next step to buy a home in your 20s is to prepare to qualify for a mortgage.  Lenders will look at a few different things when you apply for a home loan, including:

-  Credit score report

- Income

- Total debt and monthly debt payments

- Work history

- Savings and other assets

Credit score is an important factor for whether you are approved for a mortgage loan as well as the interest rate you will pay which measured by:

- Your debt repayment capacity

- The amount of capital you have compared to the loan

- How value is your collateral worth?

- Economic and social environmental conditions

The first three criteria are directly related to your finances and ability to repay the loan.  Conditions are things outside of a personal financial situation that can affect home purchases as the current interest rate environment.

Things that can work against you when buying a home in your 20s include:

- Unstable job or Haven't earned a starting income yet

- Have a low credit score or no credit score at all

- Having debts when you are a student

- Lack of savings

3- Prepare before buying a home in your 20s

The first and most important thing to do is check your credit reports and score.  You need to figure out how lenders will rate your credit.  It's also helpful in determining the type of mortgage you're eligible for and the right interest rate.

If you haven't actually set up a credit score, there are a few ways to do it.  The easiest way is to apply for a credit card, but if you are not eligible to apply for a credit card, you can ask your parents to add you to one of their credit cards as an authorized user.

If you can apply for a credit card in your own name, the most important rules to follow are paying your bills on time each month and keeping balances low.  Your payment history and available credit amount have the biggest impact on your credit score.

Next, take a look at your student loans.  Specifically your debt-to-income ratio, or how much income you're spending on debt payments each month.  Ideally, this number should be below 43% to qualify for a mortgage.

4- Pay attention to the down payment for the house

Finally, let’s focus on saving.  The amount you need for the down payment depends largely on the type of mortgage you get.

What you should consider when buying a home in your 20s is prepaid support programs and prepaid rewards.  Both can help you get the money you need to cover your down payment - This makes buying a home easier.

4 SECRETS TO BUY A HOME IN YOUR 20S

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• real estate
• property