Figuring out the right move after graduating can prove to be a very daunting task.
You’re not expected to have everything planned to a T, nor should you.
Although buying a home and settling down after college may seem enticing at first, there are a few things to consider before making the big move.
Getting into the habit of saving money early on is a worthwhile and crucial investment. Whether you are going into your freshman year or just finished grad school, it is never a bad time to start saving, but let’s face it, saving money is hard. This challenge is surely doubled for any full-time college student.
Despite about 4 out of every 5 students having a part-time job while in school, around 60% of students state that they have gone broke during a semester. This is not to say it is impossible to save up while in school, but chances are that you are more than likely not sitting on a nest egg. With the median monthly mortgage cost being around $1,556, it may be smart to consider some other living options first.
Buying a home and settling down is not the end all be all. Most college graduates either rent out an apartment or house with roommates or friends and even move back in with their parents.
In fact, according to a study conducted by Apartment Guide more than HALF of the respondents said they planned to move back in with their parents after graduating.
Now it may not sound luxurious, but frankly, there are significant financial benefits that come with moving back in with your folks after college.
Not having to pay for rent or mortgage can make a resounding impact on your savings. Of course, this is not necessarily an option for everyone and also it could stifle the feeling of independence you might have gained being on your own. Ultimately, if freedom is what you seek, then moving back home may not be right for you.
If you feel that financially you are independent enough to start the home buying process, great! However, having a sizable amount in your savings might not cut it. When looking into getting approved for a mortgage loan, the lender will want to ensure that you have a credit score of around 620 or higher.
If you have bad credit or no credit history at all, there are ways to boost your credit score such as having and using a credit card, paying off your student loans and other installment loans, etc., but these things will take time. Even if your credit score is too low there is always the option of an FHA Loan. An FHA Loan is a government-backed mortgage loan that comes with looser financial restrictions, allowing someone with debt or a lower credit score to purchase a home.
It’s time to put pen to paper and actually start looking at homes, but where do you even start? Some sage advice would be to plan for the future. One of the best things you can do is to ask yourself where you see yourself in 5 or 10 years.
Do you want to live in the city or in the country? Do you want to settle down with your significant other and start a family? What does the job market look like in your city or town?
Investing in a home may not be the best option if you plan on moving within the next year or so. Figuring out the answers to these questions is crucial for planning your future and making the smartest decision for yourself.
Condition of the Home
If you’ve reflected on your goals and realized now is the time to take this big step, make sure you are finding one that is a smart decision both personally and financially. This may seem like it goes without saying, but checking out the home and making sure everything is in good condition is huge.
You may have always dreamed of a fixer-upper, but now may not be the time to follow that dream if you can’t afford it. Home repairs can prove very costly especially if left untreated. If you don’t have the means, purchasing a home that requires significant renovation should be avoided.
other valuable tips:
Some of the more costly repairs would be things like the roof, the siding, the foundation, the septic tank and the front and back deck areas. Neglecting these things when inspecting a home, is a big mistake for a lot of first time home buyers.
Although move-in ready homes are more expensive initially, repairing a fixer-upper can add up quickly over time. To make the decision on what condition you want your home to be in, you have to decide if you’d rather pay more in a mortgage loan now or another loan down the line to pay for the necessary upgrades.
Buying a home is one of the biggest financial commitments one makes in life, so it’s not a decision to be taken lightly, especially for a recent college graduate. However, it’s also smart to invest in a home and avoid paying money in rent for years to come. If you’re preparing to graduate this year, use these home buying tips to see if you can make a new home a part of your future.
Image Credit: by Pixabay
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