By Linda Williams
The goal of purchasing your first home isn’t nearly as attainable as it once was for Gen Xers and Baby Boomers navigating the housing market. Experts forecasted that low mortgage rates and stable employment would drive more young people to purchase homes, though the reality was quite the opposite. Homeownership for people aged between 25 to 34 has declined in recent years and is expected to continue crashing down until approximately 2025.
Some of the major hurdles preventing young people from purchasing their first home include compounding student debt, increasing housing costs, lack of single-family housing, and strict credit standards. Homeownership also comes with newfound responsibility and hosts various hidden costs first-time homebuyers may not anticipate.
For instance, the standard family home requires constant maintenance, i.e., lawn mowing services, pest control services, and even gutter-cleaning services. When deciding to purchase property, you’ll also assume responsibility for coordinating your utilities and tending to repairs. Not to mention, homeowners must begin paying sometimes quite astronomical property taxes.
Should you decide you’re ready to assume these newfound responsibilities (and you manage to clear the generation-specific barriers imposed by the housing market), enlist notarization experts like these. With a notary at your side, you can streamline the homebuying process and ensure you reach this notable financial milestone without a hitch. A notary can look over and offer advice on the offer to purchase before you sign it. Additionally, these notary publics will complete the bill of sale and release the funds for the house. Think you’re ready to be a homeowner? Here are a few signs that you’re ready to tackle the financial commitment.
You have little to no outstanding debt
A mortgage may be the most debt you’ll ever take on. Clearing out lingering credit card or student debt will allow you to save more for a down payment and focus on solely paying your mortgage. Not having to pay additional monthly payments will also set you up for success when you need to cover repair and home maintenance costs.
You have a steady job
The monthly payments from your mortgage are expensive and require having a stable income. An uncertain financial situation can wreak havoc on your payment plan and result in missed payments, leading to potentially disastrous financial circumstances. Before jumping into homeownership, ensure you aren’t skating on thin ice at your current place of employment.
You have a healthy savings account
A savings account is an asset when emergencies round the corner. Flooded basements, broken appliances, and other problems always seem to arise when least expected. Having sufficient funds to cover these expenses when they make an appearance is essential to maintaining your financial security and a stable living environment.
You have a strong credit score
Having a good credit score is essential for purchasing a home. The stronger your credit score, the less you’ll end up paying in interest, meaning you can pay your house off sooner and score a lower monthly payment. If your credit score leans towards the lower end of the spectrum, put the work in to raise it above 700.
You have enough for a decent down payment
Similar to your credit score, having a higher down payment will serve your best interest for multiple reasons. For one, you’ll have less on your principal balance. If you have a down payment between 15 and 20% of the total home cost, you don’t have to pay for private mortgage insurance, which would otherwise be required. A good standard down payment is usually 10% of the home cost, which would be paid separately from your savings account.
You can afford maintenance and monthly payments
When you own a home, brace yourself to tack on additional expenses that require payment monthly. A typical rental requires utilities and home expenses such as water and garbage, while homes involve property taxes, home insurance costs, and potentially even HOA fees. If you’re able to make this jump up in monthly expenses and still put away some income into savings, you’re in good shape.
The bottom line
Whatever you do, avoid taking the responsibility of homeownership lightly. Otherwise, you may land face first in a questionable financial situation. Do your due diligence and familiarize yourself with the hidden costs of homeownership before officially taking the plunge.