If you’re fresh out of college and in your 20’s you’ve got
some decisions to make. You may have thought your tough decisions were over
once you graduated but there are even bigger ones to consider as you get older.
Even if you haven’t graduated with a college degree and working full time you
will also face similar hurdles in life and as anyone over 50 will tell you,
“You’re just getting started…get used to it.” One question more and more young
people are facing is whether or not to buy a home at a young age or whether
it’s better to rent. Yet there is no universal answer to this question. Yes, it
can make sense to get a mortgage and no, it doesn’t make sense. It depends upon
your personal situation. However, there are some questions you can ask to get
you closer to your answer.
Do you want to be a
home owner? Do you? Owning a home creates more wealth than owning any other
single asset over time. As property values increase over time, that value
belongs to you. But owning a home is much more than just finding a roof to put
over your head and keep up with the mortgage payments. It also means taking
care of the property, paying for insurance and property taxes. If you think
you’re ready to be a homeowner and you’re in your 20’s, then you might very
Are you long term
where you are? Do you plan on living
where you are now for a few years or do you think it’s possible you’ll find
another job, get transferred or simply move a few time zones away? For those in
their 20’s they’re much more mobile than someone in their 40’s. There are fewer
commitments. More people are married with they’re 35 years old and fewer when
they’re 25. You’re more likely to accept a new job in another city when you’re
the only one impacted by the move. When you rent, you can pack up and leave
when your lease expires. If you buy and then two or three years later when you
decide it’s time to live elsewhere, you’ve got a house you first have to sell.
If you see yourself settling in and staying seven to 10 years then it makes
sense to take out a mortgage.
These two basic questions will guide you on which way you
want to go but primarily it comes down to both flexibility and personal
preferences. If you’re in your 20’s you’re more likely to move compared to
someone in their 50’s. However, these two questions aptly apply to anyone
thinking of buying a home and financing it instead of renting, regardless of
how old you are. If you’re 70 years old and you move into a property and only
plan on living there a year or two it probably makes more sense to rent instead
of own. But if you’re ready to own your first home and you see yourself staying
put for a while, then a mortgage might one of the best decisions you’ve ever
made in your young life.