Maybe you just graduated from college. Perhaps you landed your dream job. You might be moving out truly on your own for the first time, or still trying to figure the “adulting thing” out. You’ve made it this far by reaching for a dream but now it’s time to get more serious about a future that is coming up fast.
This stage of life raises a lot of important questions, not the least of which is about where you are going to live. If you grew up hanging around my kids, you have probably heard my speech that renting is a big financial drain—ownership is where it’s at. It might not have sunk in at the time (you might have only been 9…), so here’s a refresher. Unless you’re unsure where life might take you in the nearer future, if you plan to stay put for 3–5 years or more, homeownership is almost always the better long-term move.
Cue the eyeroll. “C’mon Josh…” I already know what you are going to say.
- Isn’t home ownership more expensive than renting?
- I can’t afford a down payment.
The short answer to the first question is, maybe at the beginning, but definitely not in the longer term – it sets you up to build equity. The absolute answer to the second is, that is why you need to prioritize ownership and start planning now.
You have options.
1) Get help. There are down payment assistance (DPA) programs out there—some requiring zero money down. While helpful, I only recommend these for buyers who are prepared to stay in the home for at least 5 years and who have an emergency savings cushion – 3 months of expenses minimum. (BTW – that 3 months could go a long way towards a down payment…)
2) Go with a group. There are also collective strategies. One of my closest friends bought a home with two other friends right out of college. They owned it together for over 20 years, and it became a smart investment that helped launch all three into financial independence. Of course joint ownership comes with its own risks, but with housing prices in our area, it isn’t necessarily something to rule out.
3) Stay home. While the other strategies can work, I’m still encouraging my daughter to move home first and save before jumping into renting or buying. If you have the option to bank potential rent payments for several months, trust me, living at home a while longer isn’t the end of the world and can allow you to save a ton of money.
However you do it, the key is planning. Saving regularly – and upping the amount when you can. Maintaining a budget. Keeping at least a peripheral eye on the housing market. With discipline, once you have amassed enough to make that down payment and start building equity instead of paying a landlord, you will thank your younger self.
If you have questions or want to talk strategy, call me and I’ll help give you pointers or create a plan. Eyerolls accepted and no strings attached.