What is the Best Age to Buy a Home?

Many people strive to hit certain financial milestones by a specific age. These include opening a checking account, getting their first credit card, buying a car, and eventually purchasing a home.

But while some milestones are achieved during the late teens or early 20s, buying a home is something that often occurs later in life. Some people take the plunge in their late 20s, others in their 30s, and some much later. Which raises the question, what is the right age to buy a home?

Does an Ideal Age Even Exist?

Purchasing a home is certainly harder than getting a credit card or an auto loan. And because of the financial and credit requirements, some young adults aren’t in a position to buy a property after settling into a job.

For those who are, there’s an undeniable upside to buying earlier in life—namely the opportunity to jump-start wealth building.

Rather than pay rent and get no return on their investment, home ownership is a way for young people to build equity. They can then sell their home later and purchase a nicer home using proceeds from the sale as down payment. Or, they can live in the house forever and enjoy their retirement years mortgage-free.

Despite the benefits of buying a home at a young age, though, there isn’t a “right age” to purchase a first home. Although there are ideas as to what a good age might be.

According to a Bankrate Financial Milestones Survey, Americans feel that the ideal age for entering the housing market is 28. This isn’t too far off from the average age of first-time home buyers, which happens to be 32, notes a 2017 report from the National Association of Realtors.

But even with data, surveys, and statistics, the decision to purchase isn’t so much about age as it is about readiness.

How to Know When It’s Time to Buy?

A home purchase is one of the biggest financial decisions you’ll ever make. And unlike renting, it isn’t easy to get out of owning a home. So if you’re thinking of taking the plunge, make sure it’s the right time.

Some young adults rush into ownership thinking it’s the “adult” thing to do, or because they feel pressure to keep up with their peers. While there are reasons to buy earlier in life, there are also reasons to wait.

Yes, buying a home can be an investment in your future, and depending on where you live, the cost of owning might be cheaper than the cost of renting. At the same time, you should only buy if you're ready to settle down in one place for at least five to seven years, and only if it makes sense from a financial standpoint.

Consider whether your income and job are stable enough to support a mortgage payment. Also, keep in mind the cost of getting a mortgage. Many borrowers need a down payment between 3% and 5%, and there’s the expense of closing costs.

Therefore, it might be a good idea to postpone buying if you have a lot of debt (credit card debt, student loans, or personal loans). Debt payments increase your debt-to-income ratio, which can reduce your qualifying amount and limit your housing choices. If you pay off debt first, it’ll be easier to get a mortgage.

You might also delay buying until you have a strong credit profile. You don’t need a high credit score to get a mortgage, but a credit score of at least 700 can help you qualify for the most favorable interest rates.

Lastly, wait until you have at least a three to six month cash reserve for unexpected expenses. Some first-time buyers make the mistake of spending their entire savings on a home purchase, leaving little to no emergency fund for incidentals.

Summary

The experts at Blue Spot Home Loans are available to provide financial guidance and help you decide the best mortgage program for your needs. Buying a home is a stepping stone to a higher net worth, but it isn’t a decision to take lightly. Purchasing at a young age has its benefits, but only if you’re ready for this step.

Schedule a consultation today and one of our loan experts will be happy to walk you through the process. Give us a call at (800) 976-5608 or fill out the contact form to get started.