Are you planning to own a home in your 30s? Owning a home in your 30s is a relatively young age for such a big life choice. Youngsters are now investing in real estate and opting to buy a home as they are seeing merit in the proposition that it’s better to start early when it comes to possibly the biggest investment of their lifetimes. The perks of buying home at an early age include:
- You get to enjoy most of your working life without rent woes or the house continues to provide great returns as an appreciating asset.
- You get more time to repay the debt so it will lessen the EMI burden though the interest will be higher.
- Buying a home can be a great source of additional income to bring down your loan EMI burden if you plan to rent it out.
People often rush into homeownership because it’s seen as a sign of adulthood and financial responsibility. Initially, there will be too much excitement for sure but it can soon turn out to be stressful if your finances are not managed well. So, here is the guide to help make the journey to homeownership a less bumpy ride.
- Draw up a budget:
Before you start browsing, compare your income to expenses and track how you spend your money to determine how much can you afford. your monthly budget should include the total mortgage and maintenance costs of a property. You must have some fixed expenses every month. If your monthly housing costs (including HOA fees, taxes, insurance, etc.) cross more than 25% of your monthly take-home pay, it’s time to eye for some other property.
- Arrange the down- payment:
Financial discipline is the first step of investing in something great like your own home. Buy a home only when you are confident enough that you have saved up at least the down-payment amount. The down payment amount can be anywhere between 10% and 25% of the property’s market value. We opted for a 15-year fixed-rate conventional mortgage with a 20% down payment while buying our 2 BHK Residential Flat near Nungi station. Though the monthly payment will be higher, we will manage to pay off the mortgage in half the time, have a lower interest rate, and save a lot of money in interest.
- Let the home search process start:
Start your home hunting process when you have the details of your dream home sorted. Consider your lifestyle and values, features that would enhance your well-being and make a list of non-negotiables like location, square footage, amenities etc – that you must have in your future home. Find an experienced realtor who knows the area and the market and help you to settle for a great deal.
- Prepare for other expenses:
Home loans don’t come cheap. Apart from the down payment, you need to pay a hefty amount as EMI every month that’s likely to be way more than the rent you’re paying currently. And not just that, home buying process involves other expenses like – stamp duty (from 5% to 7% of the property value), registration cost (at least 1%), memorandum of title deed charges (0.1% of the loan amount), brokerage fees, legal fees, home insurance, interior decoration, electricity connection, water supply, so on and so forth. Strategize your finances accordingly to avoid any financial mess.
- Saving is not enough – invest:
Saving is not enough, you need to think about ways to invest money that will fetch you enough returns. Research and invest in some mutual fund that can offer between 10% and 15% (or even more), depending on the fund. FDs and RDs are a risk-free investment but mutual funds offer greater returns. Though they depend on market conditions, they have the potential to beat inflation in the long run. Risk is higher, yes, but so is the reward. As you are buying a home at a young age, you may take some risks.