We are half way through the 2018 year! While that may be considered exciting news to some of you, those of us who are in the top end of the Millennial generation are at the age when settling down to start a family is closer on the horizon then we are prepared for. The idea of buying a home can be considered even foreign to some of us. “A down payment?!? I barely make enough to payback my student loans, how can I take on a mortgage?”
So when is the “right” time to buy a home? When you have saved enough to walk into a conventional loan with twenty percent down? Should you look to buy once you have settled into your new career? Should waiting to pay off your student loans be step one before even thinking about buying a home? Are you waiting to see what happens when the market shifts to favor the buyer? Is the eventual decision by the Federal Reserve to raise interest rates adding pressure to buy now? How much would you really save in the long term with a cheaper home coupled with a higher interest rate? With the volatility in the job market in the United States should you tie yourself down to a thirty-year mortgage?
All of these factors are in play for the newest generation of home buyers in the United States. So what is the correct play? As a member of the said generation, I firmly believe that if you have the capital to invest into real estate then you should. Buying a home is directly connected to amassing long term wealth. The faster you get into a home the quicker you will achieve your wealth management goals. Paying off your student loans while being an important goal, should not hinder you from buying a home. Saving up enough capital to put a twenty percent down on a home in this market could take an entire market cycle if you refuse to looking into non-conventional loans. The interest rate is the lowest it will be at during our adult lives and we should not miss out on the opportunity because of the previous factors. The days of staying with a company long term over the course of your career is not in the cards any longer with trust between employees and employers at a all time low. This still should not stop you from investing into property when you have the opportunity to. Worst case, you sell your investment and take advantage of the projected rise in the market, or best case you rent your property at a profit and wait until you have made a significant amount of return in equity.
While it is easy to generalize and lump all new home buyers into this mold. Each case is different. This is why no matter how comfortable you are with real estate and investing your hard earned capital, you should always contract a real estate professional to guide you through the process. You may have all the correct answers, but did you ask all the right questions? Is making a three quarter of a million-dollar investment into a “fixer-upper” in Coral Gables a better investment than let us say a three hundred-thousand-dollar home in West Miami? I have twenty percent for a down payment, should I only look at conventional loans? Would a FHA loan be in my best interest if I use the remaining sixteen percent to directly invest in improvements to the property? Would these improvements immediately affect my equity? All of these questions can be answered by your real estate professional.
