Millennials and Home Mortgages
Millennials have been more reluctant to buy homes compared to previous generations. This is because of several factors such as uncertain long-term job prospects and student loan debt making it harder to save for the costs related to purchasing property. However, what should people in their 20s or 30s know about getting a mortgage to make the home buying process easier when they do decide its time to buy?
There Are Many Great Resources Available to Help With Financing
Many young people assume that they need 20 percent down to purchase a house. However, this is not the case. FHA loans allow you to borrow with only 3.5 percent down while USDA loans may allow you to borrow with nothing down. This may also be true if you have served in the military and want to apply for a VA loan. Many local banks and credit unions may offer similar programs that allow for lower down payments as well as money toward your down payment to make homeownership more affordable.
You Don’t Have to Live Alone
Buying a home doesn’t mean that you can’t have a roommate live with you to help pay the rent and other utilities. In fact, that could be a great way to pay off mortgage early without having to dip into your savings or otherwise harm your finances to do so. Another option for those who would like help with their housing costs is to buy a duplex or a single-family home with its own apartment. You can then occupy part of the home and have a tenant occupy their own separate portion of it and pay rent for the right to do so.
You Don’t Have to Stay There Forever
Buying a home doesn’t mean that you have made a long-term commitment to stay in one spot for the rest of your life. It is common for young people to live in their first home for no more than three to five years. After you are ready to move on, you can use the proceeds from the sale of your home to buy a new one that better fits your lifestyle. Depending on the state of your finances, you may also be able to keep your first home and use it as a rental to help pay for your next home. This may be ideal if you live downtown or in a college town as you would rarely have a vacancy if you decided to turn a house into an income property.
Tax Breaks Make Buying Preferable to Renting
In addition to building equity in your home, you get a variety of tax breaks such as deducting any mortgage interest paid. Tax rebates may be available for buying energy efficient appliances, insulation or windows. Finally, you may be able to deduct the cost of repairs or other upgrades to any portion of a duplex that you rent to tenants.
Buying a home allows for stability, control over your living space and ways to save money that aren’t available to renters. Programs aimed at those in their 20s and 30s can make it easier to come up with a down payment or pay closing costs without going broke. Therefore, if you are a young person looking to buy a home, now may be the perfect time to do so.