Thinking about buying a house, but not sure if you’re ready? Afraid to get “locked down” into a mortgage—for several years to come?
Actually, home-buying can be a smart move in your 20’s—and save you money in the long run. And it’s not as scary as you think.
While many twentysomethings prefer the flexibility of renting, others are smartly moving into home ownership, and reaping the rewards of their investment. Here are 5 great reasons why it’s smart to buy your first home in your 20’s:
#1—The monthly mortgage payment is often lower than a rent payment.
Surprisingly, in many areas, the monthly mortgage actually costs less—and sometimes significantly less—than an average monthly lease. For example, a 3-bedroom apartment lease can cost up to $2,000/month—while you can get a 30-year mortgage on a 3-bedroom home for as little as $800/month. So you actually end up with more discretionary cash to use on a day-to-day basis.
#2—You are paying into an investment.
When you leave a rented apartment after 3 years, all of your money is a loss. But if you sell your house after 3 years, you’ve most likely built equity—that comes back to you in the form of cash, to be used toward living expenses (or another home).
#3—It’s easier to buy and sell with new technology.
New technology makes the whole buying and selling process simpler and faster—so when you find the right home, you can quickly work with your agent to write up your offer and send it to the seller. In fact, you can do a lot of the paperwork right from your smartphone or tablet. For example, ReeceNichols uses paperless agent technology that lets you search for homes and even sign the paperwork digitally—all through email and their Home Search mobile app.
#4—The option to borrow money.
Once you’ve established a mortgage and some equity, many banks will allow you to create a HELOC—a home equity line of credit—to borrow against. And the interest rates are typically much lower than those on the average credit card.
Mortgage interest is deductible on your federal taxes, whereas monthly rent payments are not. Since you pay more interest in the first few years of a traditional 30-year loan, you’ll get the biggest tax advantage in the first 3 years of your new loan.
Thinking about buying a home? A ReeceNichols agent can help you weigh your options. Contact Us today.