With high student loan debt, low-paying jobs, and high housing prices, millennials are struggling to follow in their parent’s footsteps when it comes down to home ownership. However, here are a few ways they can beat the odds.
The Benefits of Home Ownership
Home ownership definitely has its perks. For starters, you’ll have control over your property and more privacy than you’d have in an apartment. You’ll also be able to deduct mortgage interest on your federal income taxes, putting more money back in your pocket.
Another advantage to home ownership is that property value usually increases over time, giving you more money than what you originally paid for. Not only this, but you can potentially leave this asset to your family.
A large number of millennials don’t believe that these benefits are within their reach due to their financial situation. But before ruling out the possibility of home ownership completely, know that there are some options you can take to get on the property ladder.
1. Create a Realistic Budget… and Stick to it!
You may have already considered this, but if you haven’t, now is the time to sit down and get your finances in order. This will give you an idea of what kind of house you can afford. But be careful – a lender might pre-qualify you for more than you can really afford, which is why it’s important to be realistic about the mortgage amount you can pay every month.
2. Make Small Sacrifices
If you want to beat the odds, you will need to make a few small sacrifices. You want to have enough money for a down payment on a home, which means you may need to cook dinner at home instead of eating out for a while, or hold off on that new pair of shoes you’ve been dying to get! Living as minimally as you can will get you closer to your goal of having your own home.
We also want to add that your first home will most likely not be your last. It’s understandable to want to purchase your dream house from the start, however, this is not always possible for more than one reason. Just know that as a millennial, purchasing a home is a great accomplishment and from here, you can only set new goals and upgrade later down the road.
3. Buy A House with Your Friends
This option can be risky, but we want to put it out there because it does work wonderfully for some people! Be sure to set up a contract that explains the contributions of each member and outlines what will happen if one member wants to sell.
Everyone is jointly liable so if one person doesn’t cover their costs, you will need to find a way to cover them. Moreover, you want to consider the legal issues that can be involved if one person decides they want to move or sell up.
It’s no doubt that purchasing a home has become more difficult since the early 1990s. Millennials have had to struggle and save more than their parents, and often find themselves looking at homes that are way out of reach of their current income.
While it is more difficult than it was years back, millennials can still get on the housing ladder with careful budgeting, planning, and adding a few roommates to the mix. They should also consider having a Des Moines homeowner’s insurance claims attorney on hand in case of any trouble. A qualified attorney can help new homeowners file an insurance claim and will explain to them what their insurance premiums cover and what it does not.
For many people, homeownership represents safety and stability. While the process of saving, buying, and insuring a home may feel anything but stable, the financial and quality of life benefits are well worth it.