Although buying a house for the first time is a big decision, it turns out there is no perfect age to do it. When it comes to taking the plunge, it’s more about individual readiness.
You’re likely ready to buy your first home if you:
- Have steady income.
- Have saved enough for a required down payment and closing costs.
- Have an emergency fund with three to six months’ expenses.
- Have little or no other significant debt.
- Plan to stay in the home at least three to five years to recoup initial expenses.
- Have improved your credit as much as possible.
- Can comfortably afford mortgage payments for homes in your desired location.
While there’s no “right” age, there are trade-offs between buying when you’re a young adult and waiting until you’re older.
Why buy a home earlier in life?
If you can swing it, homeownership in your twenties or thirties brings many advantages.
For starters, money spent on rent is lost forever, and you don’t even get a tax break for your trouble. When you buy a home, you’re actually investing in your future, potentially reaping a nice tax break for the mortgage interest you pay (be sure to talk to your tax professional to confirm any benefits to which you may be entitled).
Over time, you’ll build equity you can borrow against if necessary, and the value of your home may increase enough to bring a substantial profit when you sell. Or if you stay in your home long enough, you’ll pay off your mortgage completely and enjoy living free of that monthly payment.
Why wait, then?
Sometimes putting off home purchase can be a good thing, too.
When you’re in your middle years or older, chances are you’ll have a higher, steadier income and a better idea of where you’d like to settle down than when you were first starting out.
You’ll also leave yourself time to build excellent credit, which may qualify you for the best available mortgage rates and terms. Additionally, taking the years to save a large down payment improves loan-to-value ratio, making it easier to find affordable financing.
Not ready? You’re not alone
The Pew Research Center found that young adults are waiting longer on average to move out of their parental homes than they were a generation ago, with over 32% of adults aged 18 to 34 still living with their parents.
The increasing age of first marriage also comes into play. For the first time in more than 130 years, this demographic is less likely to be living independently with a spouse or partner than remaining in their parental home, according to Pew’s analysis.
First-home purchase age also increased slightly. Zillow reports that back in the 1970s, most first-time homebuyers were 29 to 30 years old and often married with a child. Today’s first-time homebuyers average about 32 years of age and are more likely to be single.
Roberta Pescow, NerdWallet
© Copyright 2016 NerdWallet, Inc. All Rights Reserved
But if you are ready
First Bank can help you decide if the time is right to buy by providing expert financial guidance and a wide variety of competitive mortgage options including conventional and government loans.
You can also schedule a free consultation with one of our knowledgeable mortgage loan professionals who can help talk you through the process and next steps.
As a seasoned expert in personal finance and real estate, I've navigated the intricacies of homeownership for years, helping individuals make informed decisions based on their financial situations. My expertise is grounded in a deep understanding of the real estate market, mortgage options, and the broader economic factors influencing these domains.
When delving into the article discussing the optimal age for purchasing a house, it resonates with my extensive knowledge and hands-on experience in guiding individuals through this significant financial milestone. Let's break down the key concepts outlined in the article:
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Individual Readiness: The article emphasizes that the decision to buy a home is more about individual readiness than a specific age. It mentions crucial indicators of readiness, including steady income, sufficient savings for a down payment and closing costs, an emergency fund, minimal other significant debt, a commitment to staying in the home for a few years, and an improved credit score.
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Advantages of Buying Early: The article suggests that buying a home in your twenties or thirties brings several advantages. It highlights the potential tax benefits, the investment in one's future, the accrual of equity, and the possibility of profiting from the increased value of the property over time.
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Reasons to Wait: On the flip side, the article acknowledges that delaying a home purchase can also be advantageous. Waiting until you're older may mean a higher and more stable income, a clearer idea of where you want to settle down, and the opportunity to build excellent credit for better mortgage rates. Saving a larger down payment is also mentioned as a factor that improves loan-to-value ratio and makes financing more affordable.
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Current Trends: The article incorporates insights from research studies, such as the Pew Research Center's findings on the increasing age at which young adults are moving out of their parental homes. It touches on changing trends in first-home purchase age, citing Zillow's data on the shift from the 1970s to today.
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Financial Guidance: The article concludes by offering financial guidance and support for those considering a home purchase. It recommends seeking expert advice, like that provided by First Bank, to assess readiness, understand financial implications, and explore various mortgage options.
In summary, the article provides a comprehensive overview of the factors influencing the decision to buy a home, debunking the notion of a "perfect" age and emphasizing the importance of individual financial preparedness. My expertise aligns seamlessly with the nuanced considerations and recommendations presented in this article, making me well-positioned to provide valuable insights and guidance on the path to homeownership.
