Derwin Dubose

Balling on a Budget: Five reasons twenty-somethings should buy a home now

// April 28th, 2008 // Balling on a Budget, Blog

I’ll be starting a new category today called “Balling on a Budget,” which will present ways we twenty-somethings can maximize our money and save for the future while still living our fabulous lifestyles.

It’s time for a celebration! I am about six weeks away from my first anniversary as a homeowner. At the same time, my best friend Josh, who is 23, is preparing to close on his first home down in South Carolina. I encourage twenty-somethings in small to medium cities to take a hard look at buying a home. Here are some things that might convince you to buy:

Buying a home saves you money long-term. As I mentioned in an earlier post, I had no parental support during or after college, so I’ve had to earn and save every dime to my name. Before I bought my townhome, I was splitting $1500 each month in rent with two college friends, which is pretty fair for our area.

My monthly payment including mortgage, taxes, insurance, and homeowners association dues ends up being half of my old rent. It’s a phenomenal savings, and I know that every payment I make adds to home equity. Instead of losing money each month to magically poof into the pockets of a developer, I’m paying myself. It’ll definitely pay off when I’m ready to sell.

There’s free money out there. National and state initiatives provide down-payment assistance to first-time home buyers who make less than the median income in their areas, which applies to most young non-profit professionals. The best part is that the process is pretty objective — if you qualify, you get the money — and few people take advantage of the programs.

Through programs with the City of Durham and the North Carolina Housing Finance Agency, I got about $45,000 in down payment help and my closing costs covered by public sources. I only had to put $750 down and attend classes for first-time home owners.

And the income requirement is based upon your income at the time of your loan application. If you get a raise or a better job after you’re in the house, nothing changes.

Check out the HUD website to find information on first-time homebuyer programs in your state. The site will lead you to the free money and tell you about free programs to counsel you out of bad credit or to walk you through the entire home-buying process.

The time is right (if you have a few years). It’s a buyer’s market, and we should take advantage of the housing bust’s falling interest rates and prices. There are opportunities for us to get great real estate at phenomenal prices. It will take a time investment, though, but not a long-term one.

Of course “long-term” is subjective, but many people erroneously think buying a house during the housing crisis locks you into a 30-year commitment. Don’t plan on buying a house and flipping it next year or the year after, but if you think you’ll be in an area for 3-5 years, it could be worth it to buy. Some folks disagree, but I definitely think the time is right.

Roommates can pad your budget and help you save. If you buy a house with multiple bedrooms, renting them out to other twenty-somethings or college students could give your budget just enough of a boost to save tremendously. Instead of paying a real estate developer for rent, you’re now the landlord.

And finally, buying a home gives you the opportunity to express yourself. I hated the fact that I couldn’t paint in apartment and dorm living. I mean, I could have, but I would have been forced to paint it back to the sterile white color or lose my security deposits. In my house, I’ve been able to paint almost every room and invest in art that reflects my personality and gives me pride.

But of course, buying a home isn’t right for everyone, and a first-time buyer should be prepared for some serious work ahead. Stay tuned for a post that discusses challenges twenty-somethings will have to face if they want to buy a home.