Buying a new home can be one of the most exciting times of your life, but most people tend to wait until several years after renting. Nowadays, the average first-time homebuyer is 33 years old! This means that most people spend the entire decade of their 20’s renting their home. There are a lot of good reasons to wait this long. Often, the idea of choosing one place to live for the rest of your life is intimidating. Often, the idea of spending tens of thousands of dollars on a down payment is even more intimidating, let alone impossible. Young people often want to retain the freedom to live where they want to live, accept jobs wherever they get the best offer, and move freely from one dwelling place to another without the need for a realtor. These things can all be seen as advantages, and it is no surprise that many people feel this way.

 

However, there are just as many advantages, if not more, to buying a house at a younger age. Just because the average age of the first-time homebuyer is 33 does not mean that you can’t buy one younger! All of the worries about buying a home young make sense, but there is plenty that you can do to make those worries vanish. Once you are able to look past those worries, it is very easy to both see and get excited about the advantages of buying a house young. This post is going to take a look at the advantages of buying a house young, then continue with why you should look past the initial fears and stresses that come with buying your first home, especially at a young age.

 

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Advantages of Buying a House at a Young Age

 

1.     Buying A House Young Means You Gain Equity Earlier

 

When you make a mortgage payment, you gain equity in your home. Equity is basically the same as ownership. When you buy a house and take out a mortgage, the bank technically owns your house until the mortgage is fully paid off. With each mortgage payment, you slowly gain ownership of a certain percentage of your home. Each mortgage payment consists of both principal and interest. Interest is like a fee that you pay to the bank for lending you the money, and principal is the actual money that you borrowed from the bank. Whether you pay your landlord or you pay a bank for your mortgage, you’re going to be spending the money each month; why not get something back for it? If you buy a house, live in it for 5 years, and then sell it to move somewhere else, you make a little bit of money. If you rent that whole time, you walk away with nothing.

 

2.     Buying A House Young Gives Your Property More Time To Appreciate

 

This goes along with equity. When you build equity, that means that you get to walk away with a little something when you sell the house. If you buy a house for $300,000 and you earn 10% of the equity before you sell it, that means that you walk away with $30,000 if the house sells for $300,000. Typically, that’s not all. Houses are considered one of the safest investments that you can have, because their values almost always go up. Housing prices are almost always on the rise, which means that your 10% equity might be worth a lot more than just 10% of the amount that you spent on the house. If you buy the house for $300,000, earn 10% equity through your mortgage payments, and then sell it for $450,000, your 10% equity is worth $45,000, which is 50% more than what you paid! If you were renting during that time, you would walk away with nothing, as you do not build equity when you rent. In fact, your rent normally build equity for somebody else.

 

3.     Buying A House Young Gives You Collateral For A Second Home

 

The equity that you gain in your house isn’t just nice when you sell it; it is also useful while you still own the house. You can take out loans and other mortgages using your home equity as collateral. This is very useful if you decide that you want to upsize, as you can rent out your current house, take out a mortgage on a new home, and earn passive income on the original house. I mentioned above that when you rent, you are earning equity for somebody else, and this is exactly how. If you rent out your original house to someone in need of a place to live, their monthly rent payments will cover your mortgage (and more, usually) earning you more equity in that home. Eventually, the house will be paid off, and you will have multiple properties in your name!

 

4.     Which Gives You The Opportunity To Make Passive Income

 

Spurring off of that, if you use your earned equity to buy a second home, and you decide to rent out the first one, you can make passive income off of the first one. Passive income is income that is made by doing very little, or next to no work. In this case, you would be letting someone live in your first home in exchange for monthly rent. Normally, this monthly rent will be enough to both cover your mortgage and give you some extra money from month to month. You will make money by doing literally nothing, and you will eventually own both houses entirely. Then, once the first house is fully paid off, every single month of rent is straight income for you, as you will no longer need to pay the mortgage. Imagine what that would be like – making over a thousand extra dollars per month of income, at very little extra cost!

 

5.     Buying A House Young Protects You From Rent Increases And Inflation

 

One of the biggest advantages of buying a house young is that you lock in the price of the home and monthly payment, regardless of what happens as time goes on. If you live in an apartment, it is likely that your rent goes up each year. Especially in this crazy year, some leases are increasing by over 25% year over year as the cost of living rises. This means that many people who were paying $1200 per month for their apartment are now paying $1500, and people who were paying $2000 are now paying $2500. This is not fun, and if you are renting, there is very little you can do to control the rent. You would simply need to find a new apartment if the rent gets too high for you, and we all know that moving from place to place can be stressful and a ton of work. If you own a house, your mortgage payment stays still until you have the house fully paid off. That is all in the terms of the loan agreement, and you will never need to worry about inflation when it comes to how much you pay for your house. If you wait until later in life to buy a house, it is likely that the purchase price will be higher due to inflation, and you will likely see less gains in your salary as a result.

 

6.     Buying A House Young Helps You To Build Your Credit

 

Many people struggle to build their credit at a young age. This is largely because one of the biggest criteria in your credit score is the age of your oldest credit account or credit card, and that can’t possibly be very long for a young person! While taking out a mortgage doesn’t help the age of your oldest account, it does show lenders that you are able to take on large financial liabilities and pay them off responsibly. This is something that bodes well for your future, and can help you to get better interest rates on future mortgages, car loans, personal loans, credit cards, and more. While taking on hundreds of thousands of dollars of debt to help your credit score might sound counterintuitive, it certainly does help your credit score to rise in the long run, as long as you can afford to make your payments on time each month.

 

7.     You Have Less Financial Commitments When You Are Young

 

This point is something that many young people don’t think about when they opt not to buy a home, but it is a reason that many more young people actually should be buying homes. Younger people typically have less responsibilities and commitments than older people. If you are unmarried, have no kids, and have no real commitment other than your job, there is really nothing impeding you financially from buying a home. Locking in your monthly mortgage payment at this point in your life usually bodes well for later on, when you are married with kids. Trying to buy a house at a later point in life while also juggling the costs of marriage, parenting, and adulting in your 30’s is much more difficult, and getting a head start in your 20’s is a great way to combat these difficulties.

 

8.     Buying A House Young Forces You To Save Your Money

 

Some refer to homebuying as “forced saving.” While I do not personally like this perspective, I think that there are definitely a few positive takeaways from it. Firstly, locking in a monthly payment at a young age gives you unrivaled stability for the rest of the time that you own the house. There is no need to move from place to place, negotiate new leases, or find ways to scrape pennies together. Assuming that your pay only goes up over time, your financial commitment to your home will only decrease over time. If you are not great at managing money, a mortgage can sometimes be seen as a great way to learn how to save. Your monthly payment will not go up over time, and you will be able to learn how to properly budget and save. Missing a credit card payment is one thing, but failing to pay your mortgage feels like a whole different level of mistake. Therefore, locking yourself into a monthly commitment that is this serious can often help you to properly manage your money.

 

Why Buying A House At A Young Age Really Isn’t That Scary

 

At first glance, the fears all make sense. You are signing a contract that obliges you to pay hundreds of thousands of dollars over the next 30 years of your life, and you might not even be 30 years old! How are you supposed to sign a mortgage when you have no idea what you will be doing in 30 years? How do you know you will be able to pay for it? The price is so high! What if you want to move? There are all normal thoughts to have, so don’t worry if they’ve been running through your head on loop. After all, a house is probably the most expensive purchase that you will ever make, and you should ask yourself these questions. If you’re not asking yourself each of these things, maybe you are not ready to buy a house, anyway!

 

The rebuttal to these questions is simple. It will all be ok, as long as you do your homework and work with a good realtor along the way. Banks can be pretty picky with their mortgages. Often, they will not approve you unless they are sure that you will be trustworthy. If a major bank chooses to trust you, you can probably choose to trust yourself, too. The points outlined in this post show that there are major advantages to buying a house at a young age. If you can afford to buy a house at a young age, you will likely be better off later in life if you do it. You will pay off your house sooner, sink less money into rent, and gain equity in a home that can be used for many purposes later. Buying a house young can set you up to buy your dream house earlier in life, too, which is a major advantage that most people miss out on. The sooner you own a house, the soon you will never have to pay rent or a mortgage again.

 

 

 

Thanks for reading our post on reasons to buy a home at a young age! Buying a new home at a young age is certainly intimidating, but it often comes with many major advantages, as we have outlined in this post. Hopefully the points we made in this post are helpful to you as you begin looking into buying a home in your 20’s or young 30’s. Remember, just because the average first-time homebuyer is 33 does not mean that you need to wait until you are in your 30’s! As always, be sure not to rush into any major financial commitments, like buying a home. This is a long, complicated process that should not be taken lightly. If you are looking to buy a home for the first time, it is crucial that you work with a realtor who can make sure the whole process goes smoothly for you and you are not blindsided by any problems or issues.

 

If you visit Myrtle Beach or any other place in South Carolina and fall in love, we’re here to help. We at The Boyd Team are committed to helping you find the right property for your needs and dreams. Any question that you have about moving to the area and finding your dream home by the beach is our pleasure to answer. Feel free to send us an email at eddie@boydteam.com or text or call us at (843) 222-8566, and we will get back to you as soon as we can. Being true natives of the Grand Strand and Horry County and with over 25 years of experience in the local real estate market, whether buying or selling, we can help you make your dreams a reality.  

No One Knows The Grand Strand Better! Trust, Knowledge, Experience, Professionalism, You Can Count On!

 

Wriitten by Greg @ The Present Perspective