Buying a House in Your Twenties
Posted On July 12, 2021
Before buying a house in your 20’s the first question you should ask yourself is:
Should you buy a house at this point in your life? Or do you want to invest in real estate?
Here are some advantages, disadvantages, and aspects to think about before buying a home.
Advantages in Purchasing a Home:
Homeowners have the ability to personalize and customize their living rooms. There will be no restrictions on you knocking down a wall, changing the bathroom floor, or having a dog, cat, or alligator as part of your rental agreement. Of course, any improvements you make to your home can increase its value.
It’s all yours if your home’s value rises. The value of a home continues to rise over time (though it can take years, and sometimes with alarming downturns in between). When you sell, any profit you make is yours to hold, not your landlord’s.
You won’t have a monthly payment for a long time. One of the most significant advantages of purchasing real estate is that, unlike renting, you can pay off your mortgage over time, rather than writing a check every month for the rest of your life. You might even utilize the equity to purchase your next home and pay it down over time.
Certain tax advantages are available to you. You can deduct all or a portion of your mortgage interest and property taxes if you’re one of the few individuals who itemize their income taxes. When you sell, you can take advantage of a large deduction to lower your capital gains tax liability. See Homeowners’ Tax Deductions for further information.
Disadvantages in Purchasing a Home:
When you buy something, you’re committing to remaining put. When you rent, you’ll almost certainly not sign a contract for more than a year, giving you the freedom to move. However, when purchasing a home, you should expect to stay for at least three to five years to recoup your initial purchase and closing fees (around 2-5 percent of the purchase price). It may take longer for the value of your property to recover if the real estate market falls. You may feel trapped, waiting to sell until you can avoid a loss.
Buying something indicates you’ll have less spare time. Most buyers devote more time to their houses than they did to their rental properties. When the toilet spills, there’s no one to call! You’ll either have to perform it yourself or pay contractors. Also, if you’ve never had to think about things like changing the heating filter or getting a regular termite check, keeping track of them can be difficult.
The cost of owning a home extends beyond the monthly mortgage payment. Do not compare the cost of owning a home to the cost of renting a home by comparing mortgage payments to rental fees. Homeowners’ insurance, property taxes, maintenance, and repairs are all fees that come with purchasing a home. All of these factors can substantially increase the cost of ownership.