Millennials get a bad reputation when it comes to finances, and they’re often scolded for spending money on frivolous purchases like avocado toast and cold brew. Despite whether or not this stereotype is valid, one thing’s for sure—buying a home is a smart investment for millennials.
Here’s why you should consider it:
#1 Millennials are Spending a TON of Money on Rent
For many millennials, the draw of bustling cities has led many to move into rent-centric housing markets. In many large urban areas, renting an apartment or condo is the norm, especially for the young demographic who are still in the beginning or mid stages of their professional careers.
While having few responsibilities is lovely, there are some serious downsides to renting. A few negatives include:
- The Money: This might seem obvious, but when you put a pencil to how much you spend each year on rent, you’ll probably be unpleasantly surprised. Money spent on rent is essentially money lost, since it’s not getting you any closer to ownership.
- The Landlords: In a perfect world, your landlord would always be there right away when you lock yourself out or set off the smoke alarm (again). The reality however, is that having to rely on a landlord can be inconvenient and inconsistent. Even if you haven’t had issues with your landlord in the past, that might change when you want to get that Frenchie or paint your bedroom bright yellow.
- The Leases: Though there are rules to protect tenants’ rights, you might be subject to changes in your lease from year to year (such as rent increases!). Plus, only knowing your space is guaranteed for a year can be stressful and unsettling.
#2 Home Ownership is Financial Security
There’s a reason why, for most people, home ownership is a pinnacle life goal. Beyond serving as a place to live, owning a home can help stabilize your financial future. Home ownership offers benefits both now and later:
In the short term:
- Tax deductions – Many expenses associated with owning a home can be written off for tax purposes. Just be sure to keep track of them!
- Emergency assets – If something unexpected happens and you need a large sum fast, taking out a second mortgage is often an option when you own your own home.
In the long term:
- Appreciation – Homes tend to gain value over time.
- Increased equity – As you pay off your loan, you’re actually saving at the same time, since when you do decide to sell, you’ll usually get the money you’ve been paying off back.
#3 Mortgages Don’t Have to Freak You Out
Taking out a mortgage may make you wish you’d gotten a finance degree. Once you’ve made peace with the fact that you’re going to have to crunch some numbers and do some saving, be sure to consider options beyond traditional fixed-rate loans.
A few alternatives to standard mortgages include:
ARMs: Adjustable rate mortgages (ARMs) differ from conventional mortgages because they allow you to pay a low ‘teaser’ interest rate for the first 3-10 years, which then changes based on national standards.
VA Loans: Veteran Affairs (VA) loans are great options for millennials who are either active or former service members. Taking out a first time VA loan means zero money down.
First-Time Homebuyer Programs: Programs in both the private and public sector are designed for first-time home buyers. These types of programs give first-timer buyers a leg up with low down payments and interest rates.
#4 You’re Not as Young as You Used to Be…
Even the youngest millennials aren’t kids anymore, meaning adult life is bound to catch up eventually. Moving out, getting married, and having kids are generally milestones that millennials wait longer for then their parents did, but they’re still going to start happening.
Like it or not, it’s probably time to start thinking about the reality of what having a family would look like in a rental versus in a place of your own.
Looking for ideas? Visit Americanhomebuyer.us.
#5 Home is Where the Heart Is
More practical reasons aside, buying a home allows you to create a place in the world that’s truly yours. Whether you plan on purchasing a home on your own, with a partner, or even with friends, ownership means you’ll have the power to transform the space into your dream home.
And, since renewing your lease is no longer a question, you’re more likely to be motivated to make improvements and settle in.
Buy A Home, Millennials!
The benefits of owning a home range from being able to finally plant that garden to safeguarding your financial future. Millennials are a hardworking, important bracket of the economy, and buying a home is the perfect investment.
Don’t worry, owning a home doesn’t mean you have to give up your cold brew. You might just start having it in your kitchen!
