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Buying a House In Your 20s: Is it a Good Idea?

Buying a House In Your 20s: Is it a Good Idea?

My husband and I bought our first house at the age of twenty-four. When we signed the loan papers, the closing agent looked me straight in the eye and said, “You are the youngest couple to ever sit across the table from me. You should be very proud of this accomplishment.”

I remember feeling a rush of emotions as I sat there with loan papers in one hand and a pen in the other. It felt like we were jumping hurdles in a race that hadn’t started. We were buying a house in our early 20s, well before any of our peers.

As I signed those mortgage papers, I never questioned my decision. I thought about the financial impact of buying a home, but I didn’t consider much else.

I believed without a shadow of a doubt that buying a house in my 20s was a good idea. I found a mortgage calculator and ran all the numbers. Then I searched for the best mortgage rates and jumped in with two feet.

Two years after graduating from college, I signed the paperwork to buy my first home while grinning from ear to ear.

Buying a House In Your 20s

Five days after turning twenty-four, I signed a thirty-year mortgage on a detached, single-family home in a well-established neighborhood. It seemed like the right time to buy. I had an excellent credit score, perfect credit history, and a clean credit report. Why wouldn’t I become a first-time home buyer?

It’s been two decades since I made that decision, and I’ve had a lot of time to reflect on the pros and cons of buying a house at a young age.

As a forty-year-old would what would I tell my twenty-year-old self? Is it wise to buy a house in your 20s? Should you buy a house in your 20s? Is it a bad idea to buy a house so young? Would I make the same decision again?

Should You Buy a House in Your 20s?

If you want flexibility, renting is a better option than buying. This is especially true early on in your career when you might want to switch jobs or careers.

Should you buy a house in your 20s? If you want to answer that question, start by asking yourself a few other questions first.

  • Do you intend to keep the same job or live in the same geographic area?
  • What if a better opportunity arises elsewhere?
  • What if you meet someone who urges you to move?
  • Have you ever wanted to live in a different place?
  • Are you in an advanced degree or Ph.D. program that might require moving to another country or state

In other words, will you stay in the same place for a while?

Why You Shouldn’t Buy a House in Your 20s

Think long and hard about where you work right now and where you might want to work in the future. Long commutes can suck the life out of you. Make sure you don’t tie yourself to a house that takes forever to drive to after work. Are your current goals in line with your future objectives? Ask yourself if this is the place you want to live for the next three to five years. If it isn’t, then you should wait to buy.

Why shouldn’t you buy a house in your 20s? Owning a home is a huge responsibility. It’s also incredibly expensive and time-consuming. 

As a first-time homeowner I wasn’t prepared for the home buying experience. 

Owning a House is a Huge Responsibility

Before buying a house, you should ask yourself one crucial question. Do you enjoy home maintenance tasks?

My husband and I bought a fifty-year-old house that required a lot of work and maintenance. Before buying our home, I lived in a group house with five other people. Back then, I was responsible for cleaning my 9-by-9 room and taking out the trash from time to time.

In my early 20s, I was unprepared for the work involved in cleaning an entire house. If we moved into an updated home with new features, this might not have been so bad. Instead, we purchased an old house that felt dirty even after I cleaned it. The more I cleaned, the more I resented cleaning it.

In addition to interior chores, we spent time pulling down wallpaper, painting walls, mowing the lawn, pruning flowers, raking leaves, and shoveling snow. We worked crazy hours in our early 20s, and I hated facing a weekend full of chores on Friday evenings.

When I look back on those years, I yearn for the carefree life I gave up. My friends called their landlords when problems arose. My husband and I investigated issues, tinkered with solutions, and brought in reinforcements when issues popped up.

I wish someone had talked to me about the work involved in owning a house, the constant cleaning, straightening, organizing, and repairing that takes place. The sheer number of hours spent gardening, mowing, and raking. 

Looking back, I now realize I bought too much house. If I had to do it all over again, I would’ve skipped the big yard and flowering plants.

Don’t Compare Rent Checks to Mortgage Payments

Before we bought our home, relatives kept telling us real estate is always a wise investment. “You don’t want to rent,” they told us, “renting is just throwing money right out the window. Just swap your rent check for your monthly mortgage payment.”

In my early 20s, I believed them. 

But owning a house can be incredibly expensive. We couldn’t afford a twenty-percent down payment when we bought our house, so we paid PMI each month. We also spent $12,000 on closing costs. 

We threw tons of money towards our mortgage payments, but most of the money went towards interest. In the first few years, we were barely making a dent towards owning our home. Making those mortgage payments didn’t feel much different than paying rent.

Plus, the weight of our home loan weighed down our financial options. We couldn’t spend money on travel or experiences. People say you build wealth when you purchase a property, but it’s a slow trickle to building equity, and those first few years barely make a dent. 

Owning a Home is Expensive

Do you have the money to pay for unexpected expenses?

My well-meaning relatives duped me. It turns out you can’t just calculate the difference between mortgage and rent. You have to factor in all of those costs as well as property taxes, mortgage interest, homeowners insurance, and maintenance.

Maintenance costs add up over time. When you own, you are responsible for everything inside your house. When that broken dishwasher needs replacing, you’ll need to pay for it.

Before buying a house in your 20s, you’ll want to dig into your finances a bit.

  • Do you have an emergency fund?
  • Do you have credit card or student loan debt?
  • How much of your take-home pay can you reserve for your mortgage, escrow payments, and maintenance costs?

Run these calculations before you start looking for houses. If money seems tight, it’s probably best to wait to shore up your bank accounts before searching for houses. You’ll need to prepare for unexpected maintenance costs.

Factor in Closing Costs

Buying and selling a home isn’t cheap, and closing costs eat away at a large chunk of money before you even move in.

When you rent a place, you often pay the first and last month’s rent. That’s a whole lot different than plunking down a big wad of cash for closing costs that you’ll never see again.

If you choose to sell your house, you’ll also pay closing costs and real estate agent fees to get rid of it.

Those closing costs can force you to stay locked into your home. It’s tough to walk away from a house after you’ve thrown thousands of dollars into it. If housing prices are rising, you can sell your house and recoup the money you put into it, but if prices are falling, you’ll have to take a loss on it.

Location, Location, Location

Ask yourself, where you want to live and what you enjoy?

By deciding to purchase a house in the suburbs, my husband and I prevented ourselves from enjoying city life. We could no longer stumble home from the metro or walk to nearby bars and restaurants.

I didn’t realize how much I enjoyed living in the city until I moved away from it. Instead of hanging out with coworkers after work, I spent a lot of time, stress, and money on our house. I found myself paying a hefty mortgage on a lifestyle I didn’t love.

I craved a greater sense of community. I wanted to live in a place with block parties and backyard barbecues, but there weren’t any young people in our neighborhood. Our closest neighbors were in their seventies, eighties, and nineties. They are all lovely people, but in our early 20s, we didn’t have much in common with them.

Looking back, I wish I would’ve thought more about location. Buying a house wasn’t a bad idea, but buying a home in an older, well-established community was a terrible decision for me.

Research School Ratings and Reviews

When we purchased our house, I was way too young to think about having children. At the time, we didn’t research the local school or read about its rankings.

Home prices rise in communities with good school districts. Even if you don’t intend to have children, it is wise to investigate local schools in your area. Keep in mind that school ratings often fall over time, and once they decline, they rarely rise again.

Rising Prices Are Not A Guarantee

Despite what some people might tell you, increasing real estate prices are not a guarantee. Please don’t assume that your house will continue to appreciate in the first few years after you buy it.

Historically, housing prices rise, but that doesn’t mean they will increase when you wish or need to offload it. We lucked out in the timing of our first home purchase. Had we bought our house just a few years later, the price would have dipped below the price we paid for it.

What if we had lost our jobs or chosen to move to pursue new work opportunities? In my early 20s, I thought it would be easy to sell a house we didn’t want anymore. After living through the great recession, I know that prices aren’t constantly rising.

Buying a House at a Young Age

As a forty-year-old with children, I’ve come to love my home, but as a twenty-year-old with other priorities, I could have done without it.

My neighborhood is full of gorgeous old oak trees that provide a shady reprieve during long walks and bike rides. We live within a mile of three different playgrounds. Just a bit farther out is a robust public library.

My children attended a magical preschool a few blocks from our home, and our neighborhood lies in the backyard of a prestigious university. My children grow up watching football and basketball games at our alma mater.

What matters to me now didn’t matter to me in my youth. Looking back, I wish I had asked myself what mattered to me in my twenties.

Buying a House In Your Early 20s

If I could go back in time, I would reverse my decision to buy the house we purchased. I might still buy a place, but I would choose a townhouse or small condo in the city.

At twenty-two, I didn’t need a large, single-family house with three bedrooms and four bathrooms. In retrospect, I should have spent more time focusing on where I wanted to live and what type of neighbors I wanted to live around.

Buying Your First Home in Your 20s

I don’t think I made a mistake in buying young. I just wish I thought more about what I valued. In my early twenties, I only worried about whether or not I could afford my first home. Now I realize how many other factors I should have considered.

I ran the numbers based on what relatives told me, but I didn’t perform enough due diligence on my own. Buying a house in my early 20s turned out to be a wise financial decision, but if I could do it again, I would steer clear of the house I bought.

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Bright Future

Thursday 29th of April 2021

I'm so glad you posted this. These are such good questions to ask yourself as a young adult buying your first house. My daughter and her fiance recently "surprised" me by buying a house together and THEN telling me about it (fait accompli). While I was happy for their excitement, and there was no point in putting a wet blanket on it at that point, I sure wish they had consulted me before the fact. I would have told them the same things that you wrote about here. Or, if I had read it first, I could have just referred them to it. This is very good info. I hope you reach a lot of young folks before they take that big plunge for the first time!

One Frugal Girl

Saturday 1st of May 2021

Thank you for your comment. I wish someone had offered the advice I wrote about when I was looking for a home.I wish your daughter the best. Some young couples love owning a house together early on. Hopefully, they turn out to love their new home!

Isa

Wednesday 14th of April 2021

We bought our first house when I was 28 and hubby 24. We stayed there 5 years before moving to our current house. This current house is now paid in full (with lots and lots of extra payments!!) and this is such a relief to own it! (Paid off at 39 and 35). But... I'm not a homeowner at heart. If I was on my own, I would rent a small appartement. I would love to hand out my rent and have zero responsabilities. I dislike the required maintenance of a house, and I resent the two flods we had since moving in ($$$,), with all the stress involved. So, yes, the house is paid off, but it is still about 5000$/year for insurances and municipal taxes+always something breaking or needing repairs. My house is fairly recent (35 years....ok, maybe not so recent) and in the last 5 years we had to invest around 30 000$ in it for hidden problems. So..... Owning a house is much more than a mortgage, that's for sure!

One Frugal Girl

Friday 16th of April 2021

Hi Isa,

Thank you for your comment. I think I agree with you. At heart I wouldn't mind handing over all of my housing problems to someone else. Luckily, my husband enjoys fixing things and troubleshooting problems around the house. If he wasn't around I might prefer renting too!

Accidentally Retired

Monday 12th of April 2021

My wife and I got very lucky in that when we went out to buy a house at the age of 24 as well, we bought a brand new one. Thankfully this made home ownership much easier for first-time home buyers. We also stayed in that house for 10 years, and ultimately I wish that we rented it out when we needed a larger home. We would be sitting on a cash flow positive rental that could be nearly paid off with a small prepayment.

But I agree, that if you don't plan on staying put and you aren't buying a newer home, it likely isn't the wisest decision.

One Frugal Girl

Friday 16th of April 2021

I'm glad your situation worked out. I wish we would have found a newer home. I think that would've changed my views on this immensely. Buying an old house, in an older neighborhood, was a huge mistake at the time!

Erin

Sunday 11th of April 2021

This is such a great article! My partner bought our home 16 years ago and I've been living here for the last 8, and have the same thoughts. He actually had the insight to know that he didn't want to do yard work, so he bought a condo. In 16 years, the HOA has risen from $70 to $525/month with special assessment fees every 5 years. If anyone is considering a condo, duplex or similar, ask questions about responsibility for problems and HOA cost/benefits. We identified a small water leak several years ago and rather than replacing all of the pipes, the property management made us wait until our entire home flooded to repair only the damaged pipes and refund damaged furniture. We're still waiting for the other shoe to drop...

The property value for the first 14 years was relatively stagnant, but has more than doubled in the last two years (hot market, great location, covid); had we sold within the first 14 years of ownership, he would have taken a loss on the home. Phoenix rentals are getting very expensive, so I'm glad we own... but even with the mortgage paid off, it's still quite pricey and often stressful to be the one responsible for fixing a problem and replacing busted appliances.

One Frugal Girl

Friday 16th of April 2021

Woah that's one heck of an HOA increase! Are you getting any extra benefits from your property? Have they provided more services over the years?

Mistress of Home and Finance

Saturday 10th of April 2021

Thank you so much for this article, and for being a reasonable voice on the topic! Especially in the FI bubble, there's some people pushing for homeownership that I've always had mixed feelings about. Not everyone is ready for the responsibilities involved, as you laid out. (To say nothing of peddlers for "investing" in real estate that don't temper the message with the massive responsibility required to be a landlord)

"I might still buy a place, but I would choose a townhouse or small condo in the city." That's essentially what my dearheart and I did, and I'm glad for it. Though my area in California is so expensive, if I'd known I was going to become a remote worker I would have bought somewhere cheaper.

One of the major reasons why we decided to upgrade from a studio flat to a condo/townhouse is because a bigger place allows us to further split housing costs by getting a roommate. (Or a third partner, same deal!) But just like all the other responsibilities on your list, that means more time spent doing work besides your dayjob.

All things considered, I'm glad I'm not renting any longer. We theoretically could have saved more money that way, but the neat thing about paying down principal is that it builds net worth without accruing cash. The whole time we rented, my dearheart burned his cash reserves every month. Now with a mortgage, he's forced to build equity.

One Frugal Girl

Friday 16th of April 2021

I love the idea of being forced to build equity. I hadn't thought of that angle before, but it makes perfect sense. You have no choice but to save when you pay down your mortgage.