My daughter Jordan is all grown up and on her own now. She has her Masters in Accounting and is doing quite well. However, as a Realtor®, it bothers me that she is still renting and not committing to invest her hard earned money into home ownership.
It's definitely a big commitment, obviously, and not just from a financial standpoint. It's putting down roots where you live, work, and play. However, the rewards generally far outweigh any potential downsides for those who take the plunge.
Need more convincing? I know my daughter does. How about the fact that:
The cost of rent can be more than a mortgage
My daughter lives in an area that is quite trendy and the rent is astronomical!! All that money comes out of her account every month goes to the landlord not to her. Wouldn't that make you just a little bit mad if it were you?
To be clear, that someone else is making money off you
How about now, when you think about the fact that real estate continues to appreciate and you're not getting to appreciate that appreciation. The national median existing single-family home price in the first quarter was $232,100, which is up 6.9 percent from the first quarter of 2016 ($217,200) and the fastest growth since the second quarter of 2015 (8.2 percent). As parents we always want our children to get ahead and handing over her money to a landlord is not an optimal way to get ahead anytime soon.
Do what you want when you want
Not being able to put a coat of paint on the walls or hang some wallpaper or enjoy the countertops, cabinets, or flooring you picked out because your landlord won't let you make any changes is not cool. Sure, there are some temporary solutions to make your place look better like buying furniture, but nothing compares to having the freedom to do what you want, when you want, with your space.
Hardly anyone pays a 20 percent down payment anymore
Were you under the impression that you had to come up with a huge stack of cash to buy a house? Federal Housing Administration (FHA) loans are among the most popular options for all homebuyers, and for first-timers, they make a lot of sense. First, because the credit requirements are less stringent than other loans - in many cases, you can have as low as a 620 score. Also, you can qualify with as low as 3.5 percent down. On a $250,000 house, that's only $8,750.
FHA mortgage has one of the most lenient mortgage types available nationwide. There are very few credit restrictions with the FHA loan and the agency allows your 3.5% down payment to comes as a gift from a family member, employer, charitable organization or government home-buyer program. Knowing how important home ownership is I would certainly be willing to assist with my daughter's down payment.
Rates are still very low and competitive
Yes, they've gone up a bit recently and are currently sitting right at four percent. But when you think about the fact that a decade ago they were over six percent and in the 1980s they were almost 18 percent, four percent looks a whole lot better. Money is cheap right now so it's never going to get any better than this.
Dogs are cool
Jordan has a really cute dog named Raleigh. Raleigh is a bundle of energy and loves to run and play outdoors. Having a small yard for Raleigh to play would be optimal for Jordan.
Everyone's doing it
Are your millennial friends starting to buy houses? They're part of a sweeping national trend. "Get ready to see more first-time home buyer clients. In the first quarter of 2017, the number of new-owner households was double the number of new-renter households. I've had several this year and they are so appreciative of my expertise and assistance with the process.
First-time buyers also account for 42 percent of homebuyers this year, up dramatically from 31 percent in 2011. I know you are probably afraid to take the plunge and are concerned about the affordability but sooner rather later in this market would be the best time to become a home owner.