Do you ever think about owning your dream house? My husband and I did. We got married in our 20’s, and it was always a goal of ours to buy a home before 30. However, saving up the money, finding the right place to live, and going through all the paperwork isn’t the simplest thing. If you are wondering what habits or tactics to use to buy a home before age 30, we’re here to tell you how we did it. We’ll discuss how to save up a down payment, decide on a new build or an older home, where to buy, and all the basics, like finding a loan officer and working through the literal mountain of paperwork that awaits you. It seems daunting, but we’ll try to keep it simple and give you our best advice.
- How to Know When it’s Time to Start Saving.
- Deciding Where to Live – State, City, and Neighborhood.
- What to Do First.
- Finding a Loan Officer.
- Finding a Realtor.
- Finding Your Homeowner’s Insurance.
- How to Save – Two Approaches.
- New Build or Older Home?
- Closing – Costs and Meetings.
- Moving Day.
- Paying Off Your Home Early.
How to Know When it’s Time to Start Saving
It will look different for everyone, but there’s certain things that you should have in place before you start saving for a home. For example, we recommend that you are already renting somewhere and are making rental payments. If you’re crashing at a friend’s house,, you may need to get a few more things in line before saving for your first home.
In addition to being used to paying rent, you should have all insurances in place, some savings for emergencies, and consistently pay all your bills on time. Why? Because it shows good financial discipline, and if you are having trouble making payments now, this will not change when you move into a new house. It will only complicate things. Think of this as a board game, and the end goal is your house. But to get there, you’ll need to move forward in other areas, be patient, and work hard.
Suppose you have all the above in place, then congrats! If you want to buy a home before 30, now is the time to begin saving. Remember, just having your finances in order enough to do this is cause for celebration.
Deciding Where to Live – State, City, and Neighborhood.
Buying a home that’s in a location you don’t love could bring you regrets later. When deciding where to shop, keep in mind whether you plan to stay in the state you currently live in, or are moving soon. Then, determine what city or town you prefer. It will probably become apparent when you think of your job, commute, and proximity to family and friends. Last, look into neighborhoods. Thorough research of communities is crucial in this stage. Ask what the schools are like, what the crime rates are, what the population is, and if there’s anything noisy nearby, like airports or trains.
When we decided to buy a home, we also knew that we wanted to move to a new state closer to our family. Once we got there, we took some time to research the surrounding towns, and find a neighborhood that we liked. We wanted to be sure that the home’s value would go up over time, so we looked around a lot.
What to Do First.
When you begin saving to buy a home before 30, it’s good to have a separate account (or two) to invest your savings. I think we used two or three accounts due to interest rates when we started saving. You should also have at least a year, and maybe more, before you hit 30, to have enough time to buy.
Something else you’ll want to do is to start researching home buying processes, and how to save. I looked all over Pinterest, my husband found YouTube videos, and we learned together about everything required by home buyers. We still didn’t know it all at closing, but we had a much better idea of what we were doing because we researched continuously and asked questions.
Remember: always ask. Ask your realtor, other homeowners, trusted friends, and financial advisors about anything unclear. You’re the one putting your money on the line with this purchase – you should know what you’re doing, and where the money is going.
Finding a Loan Officer.
You need someone trustworthy who’s been in the business for a while to be your loan officer. They will help you get the money for your house and tell you what you qualify for. Two Cents on YouTube has a great video that discusses this, and they say it is essential to go with an officer that someone else you know can vouch for. Recommendations are the key to acquiring this member of your team. When you’re asking others who they worked with on their loan, make sure the person you ask is someone that lives in the area you are looking to buy in, and that they also bought their home fairly recently. Recently meaning in the last five years or so. A recommendation about someone they worked with a year ago can be more valuable than a person they did business with 20 years back.
Finding a Realtor.
Similar to finding your loan officer, your realtor should be chosen based on recommendations or referrals. Another tip I’ve picked up: listen to what others in the industry are saying. People in the home selling business usually run in the same circles and have heard of each other. I could tell we picked a good team based on what others in their field said about them, and how often they’d worked together before.
Finding Your Homeowner’s Insurance.
Every home needs insurance, and there’s no shortage of options. But take your time researching. The cheapest isn’t always the best. Make sure that your insurance is also good quality. Ask about deals, like bundling your home and auto to save more. I’m no insurance expert, but here’s a link to an article that goes into more detail and can help you get started.
How to Save: Two Approaches.
When determining how to save for your house, there are usually two schools of thought. The first is the systematic approach, saving over a few years. The second is what I like to call the roller coaster, and it’s saving a lot in a short amount of time. We’ll take a look at each one here.
The systematic approach is best for those who want to buy but are comfortable where they are and are not in a hurry. It works if your current living situation is good, and you aren’t planning on moving soon. The best way to begin is by saving a percentage of your income every month towards your home goals. You add up cash slowly over a year or two or three, eventually ending up with a down payment. The great thing about this is it doesn’t disrupt your daily life much. But it does take much longer than approach two.
The roller coaster approach is a fast way to save, but your life will look different for a while. However, it’s worth it if you are determined to buy a home before 30. It is the approach we took in saving for our home, and we managed to reach the required down payment for the house of our dreams in eight months. However, we made adjustments and were willing to do many things that some people aren’t or can’t do.
For example, we moved in with my parents for several months to save money. We worked two (and sometimes three) jobs each, paid our bills, and threw everything else at the home fund. We were tired and worked crazy long hours, but still managed to see friends and family sometimes. I worked seven days a week for a while – but it was worth it. At the end of those eight months, we were the proud owners of our very own home.
If you want to take the roller coaster approach, the steps are simple. Reduce expenses by downsizing your living situation or taking on roommates. Find a high-interest savings account. Take on an extra job. (If you are buying the home with a significant other, at least one of you should do this, but if you have the time, it’s faster if both of you get an extra job.) Then put every penny from your additional paycheck and anything you can from your regular income into the savings account. With hard work, this approach can take less than a year, but it depends on how much you purchase the home for and how much you will use for your down payment.
New Build or Older Home?
New or old homes can be a big deal or hardly matter at all. It also has a lot to do with the neighborhood you choose. The great thing about new homes is that if something goes wrong, it can usually be fixed under the first year of warranty. Older homes have character and mature yards, which is nice. But there could be a lot more maintenance and upkeep with an aging home. Both can be good options, but it depends on what you’re willing to spend or can get the current owners to fix, and what matters to you in terms of the home’s aesthetic.
Keep in mind while saving that you will also need to pay closing costs, which can range between 2 and 5% of the home’s price. Closing includes inspection fees, appraisal, and more. I recommend saving more than seems necessary. You will not regret having too much money when you close on the house, but you could face problems if you don’t have enough.
Also, remember that the month before you close will be hectic. You’ll need to meet with your realtor and loan officer, sign paperwork, do the walk through, and other things. It helps to take several days off before you close, if possible.
This part is exciting because you’re moving into your new house! You decided to buy a home before 30, and accomplished it! You get to decide where the furniture goes and finally live in the place you’ve been dreaming of. However, expectations and reality can differ.
You will probably be tired from the last few weeks of closing on your house, and may want nothing more than to sleep for three days. Hire movers or get friends and family to help you with your move if you can. To make things easier, label all boxes clearly with details about contents, and what room each box goes in – that way, people don’t have to ask you where to put your stuff. And order food or make something easy, like sandwiches, on moving day. You may be way too exhausted to cook, and all of your kitchenware is likely still packed.
Having a few boxes that you know to open first can be helpful during your first week. Fill them with clothes, dishes, toiletries, towels, and bedding. This way, your life isn’t too disrupted after the move. Here’s a great article on this.
Paying Off Your Home Early.
A home is a blessing, and even more so when you own it outright. Most people opt for a 30-year or 15-year mortgage. Either way, you can still pay off your home early by making extra payments a few times a year. You can do this by paying a significant portion towards the principal at the end of the year, or perhaps a couple of times a year. You can also add a few extra hundred onto your house payment each month instead. If you go with option two, make sure the additional amount goes towards the principal and not interest. Be very clear about this! You want to pay off your home, not give unnecessary money back to the bank.
Buying your first home is a huge feat to accomplish, and even more so if you can do it before age 30. We were 29 when we purchased our home, and this article details our experience and is an overview of the most important things to help you get started. I highly recommend researching from many sources before buying. Dedication and focus are the keys that make all the difference when you buy a home before 30.