The right time to buy a home will differ for every person, but it is common to wonder if there is a “sweet spot” to take this step. A home can be the largest investment many people will ever make, and deciding whether to become a homeowner will have financial implications for years. Before looking at homes for sale in Haines City, you should consider your goals and lifestyle and if this time makes sense for you. One factor you consider during this decision may be your age, in addition to a range of other questions.
At What Age Do Most People Buy Homes?
While you will have to make the decision to buy a home independently, it can be helpful to know what the most common behavior is amongst others. Overall, homeownership rates increase as age does. Based on the 2020 U.S. Census Bureau data, homeownership rates by age in late 2020 were as follows:
- 38.5% of those under 35 years old
- 61% of people 35 to 44 years old
- 69.8% of people 45 to 54 years old
- 76% of people 55 to 64 years old
- 80.2% of people 65 and over
Additionally, the median age of first-time homebuyers in 2017 was 32 years old, though those buyers have a generally higher income than others in their age group.
When to Buy a Home
Regardless of your age, there are some signs you can look for that indicate you are ready to buy a home. At a bare minimum, these are the questions you should ask before moving forward with the home buying process.
Can I Afford The Payments?
In addition to monthly payments, you may need to consider other costs of homeownership. These may include property taxes, mortgage insurance, or HOA fees.
Can I Get Approved for a Loan?
If you can’t pay cash, you will need to secure a loan to move forward with a purchase. This process will take into account if you can afford the monthly costs of the home, but it will also look at your credit and employment, as well as other factors to be sure they want to provide the loan. You may also be eligible but only be able to get a high interest rate or other unfavorable loan terms.
How Long Will I Live Here?
You don’t have to plan to be in a home forever for it to be worth buying, but you should plan to be there long enough to recoup transaction costs and to cover any price declines. Building equity over time can make up for these potential costs, but if you are planning to move in a year, you likely will not recover enough equity.
Can I Afford the Risks?
Even with a thorough inspection, owning a home means there can be unexpected costs when something inevitably breaks down or in the form of ongoing maintenance expenses. You also need to be prepared for potential market fluctuations that cause your home to lose value for a period of time. Ideally, before buying a home, you have enough money in place that you can weather these challenges.
If you don’t feel like you can answer yes to these questions, it doesn’t mean you’re irresponsible or there is something wrong. There is no age where you “should” feel ready for this responsibility. However, you should also consider the challenges of renting and which may make the most sense in your scenario.
Reasons to Buy a Home Young
If you want to buy at a young age and have the resources to do so, there are a number of benefits to getting into the homeownership game early.
Assuming that everything goes well and the market is somewhat stable, owning a home is a great way to increase your net worth. Mortgage payments are essentially a “forced savings” plan that help you to build equity in the property. You can ultimately use this to purchase another property or fund other needs later in the future. Instead of 100% of your monthly housing payments going to a landlord, you “save” a portion of each payment to invest later.
It isn’t guaranteed that your home will gain value, but it is what happens in most cases over the long term. Owning real estate can be a way to protect yourself against inflation when your property keeps pace with rising prices. Particularly in a strong market with growth potential, price appreciation can be a part of your accumulation of wealth. However, always be sure to choose a home you’re happy living in, with price growth as a benefit for the future.
Your Own Space
As a homeowner, you get to make all the decisions about your space. This means you can customize the appearance to suit your needs and style, including making renovations to add value. You won’t need permission from a landlord or to undo changes before moving out, and you’ll never need to pay a security deposit. While local rules and HOA restrictions may still come into play, you will definitely have more freedom in your own home.
Reasons to Buy a Home Later in Life
Even with the compelling reasons to buy a home young, you may prefer not to rush the process and rent for a while longer.
The process of buying or selling a home can take time, emotional energy, and money. The earlier in life you buy a home, the more likely you are to move in the future and go through the process more times over your lifetime. Some people want to minimize these transactions and wait to buy until they know it is a lifelong move.
As you age, you may also get a better picture of what you want in a home. When you have a better sense of your preferred location, your income, the size of your family, and other priorities, it may make more sense to put down the roots a home requires.
Many people will earn more money as they age. Entering these higher-earning years can make it easier to buy exactly what you want without it being as much of a stretch. You can use your 20s and 30s to save up for a house and move to a career that allows you to buy the house of your dreams or put down a large payment.
Things to Consider When Buying a Home
Whatever your age is, there are a number of things that can help you decide if buying a home is good for you at this time.
The conditions of real estate market in your desired location may steer you toward buying or toward waiting. For example, if you are currently paying an excessively high rent but can purchase for a reasonable cost, you may buy sooner rather than later. In other cases, interest rates or home prices might be so high that it makes sense to rent for a bit longer.
The more money you put down on a home, the more you will be able to minimize monthly payments and interest costs. A high enough payment can also let you avoid paying extra private mortgage insurance and reduce your risk if you are able to pay 20% or more upfront. Some loans will allow you to purchase with a smaller down payment, which makes buying a home younger more feasible, but you should always evaluate these tradeoffs before making a decision.
If your career may change over time, it can have implications for both your income and your location. Some medical professionals, for example, may start out with debt burdens so high their budget is restricted but will later earn higher incomes that level this out. Some jobs may also allow you to work remotely, and you won’t want to be tied to one location, or you will want to be within distance of a particular city.
Owning a home means you will be responsible for everything. Consider whether you can take on lawn care tasks, maintenance, renovations, and anything else that comes up. This may mean you will take it all on yourself or hire contractors and recurring help to tackle these things. Along with the costs, consider the time investments of these options.
Is There an Age Restriction?
In most states, you have to be considered an adult to purchase a home, which usually means 18 years old. This is what makes you eligible to complete legal agreements like real estate contracts and loan documentation. If an adult is willing to sign the contracts, a minor can be a part of the buying process. There is no age limit on buying a home- you can be well over 100 and still purchase a new place!
If you’re anxious to get started, local experts can help provide guidance on what the best options are in your unique situation.