Purchasing a home is a huge investment, and one that takes a lot of funds, patience and responsibility. While it can be tempting to move out of your parent’s home to fend for yourself, owning a house has its own list of unique duties that require a certain level of property management skills. The question lies in whether or not a college student or recent graduate should attempt to buy their own house. After all, many might ask themselves; if not now, when? You might be studying to enter a solid, high-paying career or you might have recently graduated and are sure that you’ll find a job that pays well, guaranteeing you that owning a home will be a cake walk.
Here are some of the facts you’ll want to consider before buying your first home:
Do You Have a Stable Career Ahead of You?
Just because you graduated college or are studying a major that could potentially bring in a six-figure salary does not mean that you’ll get what you want. It’s not uncommon for college students to graduate and work minimum wage jobs for years before something comes through. You cannot rely on a college degree alone to pay for your home, that’s the simple truth. Your college degree means nothing when buying a home if you don’t have the job to back it up.
Do You Have Enough Saved Up for a Down Payment?
Home experts agree that a good down payment is 20 percent of the cost of the home. Your $200,000 home will require a down payment of about $40,000 if you want to reduce mortgage costs and eliminate future debt problems. Without a down payment, that 20 percent gets included into your mortgage and can raise the monthly payments substantially. If you haven’t already started saving up for a down payment on a home, now is the perfect time to do so. Instead of buying a home straight out of college, spend some years saving money and you’ll eventually be glad you did.
Do You Know How to Care for a Home?
Caring for a home is a skill in and of itself. Yes, you can call plumbers, electricians and painters to do all of the work in your new house, but this can become extremely expensive relatively quickly. While you don’t have to be a full-on construction worker to successfully own a home, a small amount of foreknowledge on home repair and maintenance is necessary to avoid hefty contractor fees.
Can You Afford Monthly Mortgage Payments?
It’s upsetting to realize that an estimated one million people lose their homes to foreclosure every single year. Foreclosure is the leading cause of home loss in America, forcing people to leave their houses and essentially fend for themselves. Foreclosure occurs when you don’t make your monthly mortgage payments and the bank takes possession of your home. For college students and recent grads, you need to know that you have it within your budget to pay for a mortgage so that foreclosure doesn’t happen to you.
Will You or Do You Have Student Loans?
It’s all too easy to get caught up in the excitement that comes with buying a new house. You might have friends or coworkers who are homeowners and it’s thrilling to know that could be you, too. However, being a college student nowadays and having insurmountable student loan debt almost go hand-in-hand. If you’re drowning in a sea of student loan debt, there is no possible way for you to afford a mortgage on top of your already-impossible financial burden.
So, Should a Student or Grad Buy a Home?
Unfortunately, it is often financially unsafe and irresponsible for students and recent graduates to buy a home. Student loans, an inadequate down payment or an irresponsible attitude towards bills could leave the cheery-eyed youth racing to the bank to beg that their home not go into foreclosure. Home buying works for some young people, but it is often recommended that you stick to a rental or continue living at your parent’s until you are absolutely certain that purchasing a home can be done safely and securely.