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5 Money Lessons You Can Learn From People Who Bought Their Own Homes in Their 20s


 


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 1 month ago '05        #1
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5 Money Lessons You Can Learn From People Who Bought Their Own Homes in Their 20s
 

 
5 Money Lessons You Can Learn From People Who Bought Their Own Homes in Their 20s

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If you’re under 30, buying a home might sound like a far-fetched dream: Fewer people between ages 25 to 34 are buying homes now compared to older generations at that age, according to a July 2018 report from the Urban Institute. And if you’re dealing with student loan debt, you might find yourself feeling particularly swamped: According to an October 2018 report from Magnify Money, a LendingTree-affiliated site, millennial households with student debt have accumulated, on average, $85,289 less wealth than their debt-free peers.

But despite this, many millennials are, in fact, buying homes. Though 54 percent of urban home buyers did so with gifted funds, many people under 30 have achieved the American Dream with their own money—even with student loans.

How are they so good with money? Instead of postulating, I went straight to the source: I spoke to a dozen people who purchased homes before 30 about their best money tips. Here, the five most common pieces of advice:

1. Settle for less than what you can afford
Ashley Auwerter was a 21-year-old single mother when she bought her first home for $99,000 in Rapid City, South Dakota, in 2008. Even though the bank told her she qualified for a $160,000 mortgage, she knew that price was too high for her budget. “I didn’t want to hate my mortgage payment,” she says.

It’s hard to predict life, but try to find a mortgage payment that leaves room for unexpected changes. Alexandra Collins bought her first home with her husband in Seattle, Washington, at age 26 when she was working at a big tech firm. Now that she’s started her own business, the mortgage on their $433,000 home no longer makes sense for their budget.

“A big lesson is not getting locked in a situation like we did if you think or you know your circumstances will change,” she says.

Sometimes, not hating your mortgage means settling for a home that’s good enough. In 2011, Allison Driscoll, a Realtor, and her husband bought a foreclosed condo for $63,000 with a 20 percent down payment when she was 23. The couple made some concessions to buy something affordable:

“The walls looked like someone had smoked for 100 years in the house. White and yellow sponge paint on everything,” she says. She and her husband have since sold the condo and bought a new house, using the profit from their former condo as part of the down payment.

Beth Jones bought a fixer upper home at age 25 and renovated the entire interior. Now done with the renovation, she can enjoy her home and the value she built into it. “After everything was done, I built in about $60,000 worth of sweat equity. I saved a very large amount doing the renovation route rather than buying turn-key,” she says.

2. It pays to have a side hustle
A lot of the young homeowners I spoke with worked extremely hard on top of full-time jobs to save the money for their homes.

Liz Enriquez from Hamilton, Ontario, worked as a social media manager on nights and weekends after her labor market analyst job. “I was working like 12 to 14-hour days,” Enriquez says. “I pretty much doubled my income through my side hustle, which is now my full-time job.”

3. Use credit cards strategically
Though some people may stay away from racking up credit card debt, many of the young homeowners I surveyed said that they used benefits of credit cards to save cash monthly:

As a single mom, Auwerter sometimes uses credit cards to make bigger purchases. “The only time I use them is with a 0 percent APR promotion,” she says. “I take the total and divide it by the promotional terms. So, if it was 21 months, I’d divide it by 21 and that’s my monthly payment.”

Lance Cothern, who bought his first home at age 24 in Panama City Beach, Florida, shares 23 credit cards with his wife but never carries a balance. “If you have the discipline and you know you’re not going to use your credit card more than you would paying with cash or a debit card, I’d say go for it and take advantage of the rewards offered,” he says. They recently used rewards to take their son on a free trip to Disney World.
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36 comments for "5 Money Lessons You Can Learn From People Who Bought Their Own Homes in Their 20s"

 1 month ago '05        #2
wmsproductions 17 heat pts17 OP
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4. Student loan debt doesn’t have to hold you back
You may want to pay off your student loans before you take out a mortgage, but many people I surveyed still had student loan debt when they bought their first home. They’re not alone: A recent report from the U.S. Department of Housing and Urban Development found that people are taking on FHA loans with more debt (presumably those from student loans). Additionally, in June 2018, a CoreLogic analysis found that conventional mortgage lenders were overall easing approval requirements.

And though student loans may be annoying and expensive, they might actually help you save money in mortgage interest over time. How? Making consistent student loan payments actually helps drive up your credit score. For example, Driscoll built hers by making regular payments to her $75,000 worth of student loans and keeping the same credit card since college.

Cothern didn’t have student loans, but his wife accumulated $80,000 in student loans from nursing school. Using the rule that rent should be roughly a third of his income, he found cheap rent and saved the difference. “Rather than spend that money on something else, I took the difference and put it into a savings account every month,” he says. This method helped him save enough for his first home down payment and make consistent payments towards his wife’s student loans.

5. Split expenses whenever—and however—possible
Buying a home can be daunting—and expensive—solo. Kate Ziegler, a Boston-based Realtor, and her partner, Jack Romano, purchased a four-unit multi-family home together in Boston, Massachusetts, when they were 28 and 29. They did most of the renovations themselves. Even together, it was a lot to take on. “I can’t imagine having gone through our first purchase as a single person,” Ziegler says.

Caroline Schmitz, a senior account executive from Nashville, Tennessee, bought a $198,000 fixer-upper home independently, but her boyfriend, Justin, who had a background in construction, helped with the renovations. “We found a home with good bones and a bad kitchen and put all of our efforts into renovating the kitchen and the bathroom where most of the equity lies,” she says.

If you don’t have a partner, family support can also help you achieve homeownership—even if they don’t have the cash to help with a down payment. Christina Fowler was working as an online stylist and doing freelance marketing when she bought her first home in Sacramento, California, in 2017 at age 24. Although she was only approved for a $180,000 home, she ended up buying a $285,000 house because her parents co-signed the mortgage. “I plan to refinance to a more conventional loan without my parents on it as soon as I can,” she says

And you can make your mortgage even more affordable by “househacking,” too. Lindsay Krämer, a freelance writer, and her husband bought a $325,000 multi-family home in 2018 that helps them pay their mortgage. The other unit of their two-unit home in Bloomfield, New Jersey, currently rents for $1,250. “The rent they pay basically cuts our mortgage payment in half,” she says. “If we were funding this house by ourselves, we would be strapped every single month. We wouldn’t able to save.”
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 1 month ago '18        #3
dinono10 2 heat pts
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Brought my studio flat 2.5 years ago. My morgage is only £410 a month. Overpaying it every month only by £50 a month, mind you.

It's a big and new studio flat (currently I have it fully booked on airbnb). I can afford the morgage and own a nice car. Would like something bigger obviously but prefer to own something I can afford comfortably.
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 1 month ago '15        #4
isthistobe 452 heat pts452
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Yeah let’s see those statistics in New York and Southern California
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 1 month ago '04        #5
nwking 70 heat pts70
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I live in the North West Seattle and Portland are expensive but you could live out in the burbs and rive in or find a job let's you telecommute. Some people at the company I work for live in Iowa and only fly in quarterly for meetings. Yes one reason was housing prices but they still have the job they want and get paid the same amount as if they lived in the city some you people are not willing to sacrifice, they want it all now. I told you guys before my sister in-law use to live in Manhattan now she lives in long island and has to commute but she lives in nicer home and it's cheaper.
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 1 month ago '04        #6
Chokeabiish 1 heat pts
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this isnt good advice. i bought my first house when i was 21. beyond looking at affordability u need to look at what will u have to do to that house in 3,5 or 10 years. most people buying their first home are not mechanically inclined. buying a house that has character sounds nice untill u have fix a small problem like changing a new toliet to running all new wires in the walls because u didnt know and the inspector didnt see u have knob n tube. A better way ro go about buying a first time home is investing money money into one u mostly dont have to fix.
As far as thinking u can pay a 350k mortgage on making 75k a year,well u shouldnt be buting a home to begin with. If anything u dont need to use your credit cards really because your home is now your revolving credit. stick to buying with cash/ what u have as opposed to what u think u can pay off. these people saying they bought a mutli family to help pay on their own mortgage are well off and dont have regular jobs. buy your home based on your regular houred job. not overtime or a side hustle. those things can vanish and u still have a mortgage to pay.
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 1 month ago '11        #7
Tooly Da Gawd 33 heat pts33
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 isthistobe said
Yeah let’s see those statistics in New York and Southern California
Are you dumb or are you stupid?
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 1 month ago '15        #8
nore 707 2 heat pts
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Bought my first house in Texas for 142k mortgage was about $775 not including property tax. I paid about 350 extra on just principle for about 5 years. House is now worth 150k I only owe 100k and getting it refinances to drop my payment to 450. Renting out and making an extra 300 a month. Buying a house where you pay more on principle every month is the way to go. It lowers your interest rate and helps you gain equity fast. That’s my advice when you buy a house go for a smaller or cheaper place and then put extra payments on principle and you’ll see your equity grow rapidly and if you’re in a tight squeeze for money you can just make a normal payment for a month.
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 1 month ago '04        #9
pocketchange 180 heat pts180
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I'm about to to do the first tip, settle for less. I've been living in the hood most if my life so i'm sure i wont have an issue with it now. Only thing is now, I switched states and moved out of Florida. sh*t is more afforable now. I wouldn't mind buying a 10k or 15k house for the low i aint trying to pay no mortgage unless a bank will finance me, but im trying to jump in the game with or without the banks. The crib we in now is owned by a family member and need some fixing up, butnim definitely in a position to stack up and buy something. And out here where im at now it's mostly white people and aint as bad as it is where i'm from and dont nobody know me here.

I figure if i put myself in a position to buy something and fix it up over time the money will just stack up over time and ill look up and have more freedom and i can buy more property and travel around abd live a decent life with or without being famous.
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 1 month ago '16        #10
The Waraba 25 heat pts25
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Will buy land and build my own.

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 1 month ago '16        #11
Supreme God 128 heat pts128
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I'm 30, bought my home at 29.
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 1 month ago '06        #12
realgunta 909 heat pts909
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arent those 5 tips pretty obvious though?
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 1 month ago '10        #13
stizz44 23 heat pts23
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 nore 707 said
Bought my first house in Texas for 142k mortgage was about $775 not including property tax. I paid about 350 extra on just principle for about 5 years. House is now worth 150k I only owe 100k and getting it refinances to drop my payment to 450. Renting out and making an extra 300 a month. Buying a house where you pay more on principle every month is the way to go. It lowers your interest rate and helps you gain equity fast. That’s my advice when you buy a house go for a smaller or cheaper place and then put extra payments on principle and you’ll see your equity grow rapidly and if you’re in a tight squeeze for money you can just make a normal payment for a month.
You paid $142k for your house and 5 years later it's worth $150k??? That part of Texas are you in, its sounds like the appreciation is terrible down there.
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 1 month ago '06        #14
tharegime 12 heat pts12
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Try this in the bay area where homes start at $900,000
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 1 month ago '04        #15
Wizzarino|M 
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I bought my first home at 28...

It's not hard, with a little research and planning, anything is possible...

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 1 month ago '04        #16
Jasonb619 
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In So Cal, bought a fixer upper house for 240k when I was 28. Steady job, excellent credit and open minded made it work. On side note fixed it up and sold it for 375k several years later haha.
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 1 month ago '04        #17
pocketchange 180 heat pts180
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 The Waraba said
Will buy land and build my own.

Word people i know built a cabin out of the wood on their land. I feel like the you really get your mind right when you step away feom the urban areas in this country.

If a person in the hood trying to figure out what direction to head in, step back from the city and move somewhere that's kind of rual. And get around some real survivors.
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 1 month ago '13        #18
mynam3isearl 6 heat pts
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I bought mine before 30. I will say the market and opportunity (for me, the GI Bill which allows me to not pay any % down on a home) play a huge part. In NorCal I was very close to buying a new home for $343k with no backyard and 10 ft away from the neighbors home. What held me back is I knew I wouldn’t be in Cali for years to come but the mortgage and HOA totaling to $2150 a month for a 1500 sq ft house didn’t settle right in my mind.

Being stationed in Texas, I built mine with everything I wanted for around $240k being a little less than $1700 a month. House was 700+ sq ft with a nice yard and a 40+ ft driveway. Also did this because the market is growing fast with outlet malls and access highways being built directly next and for my neighborhood.

All in all ppl, just be mindful of everything before you make this big of an investment.


Last edited by mynam3isearl; 04-20-2019 at 08:09 PM..
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 1 month ago '15        #19
nore 707 2 heat pts
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 stizz44 said
You paid $142k for your house and 5 years later it's worth $150k??? That part of Texas are you in, its sounds like the appreciation is terrible down there.
Slow grind that’s all. I’m not to worried about it if it goes up 40k in 20 years I’m fine with that slow money it better than fast money
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 1 month ago '07        #20
No Notoriety 128 heat pts128
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Land never goes out of style. From the core of the planet to the sky.
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 1 month ago '04        #21
biscuit 128 heat pts128
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 The Waraba said
Will buy land and build my own.

This is the wave.


Custom built is what's poppin. Costs some decent bread tho.
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 1 month ago '15        #22
chrishansen88 96 heat pts96
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 isthistobe said
Yeah let’s see those statistics in New York and Southern California
Bought my home 3 years ago at 28

I live in SoCal I.E to be exact not expensive as L.a, San Diego or the OC but it’s still a prime location and can be done if you have your finances and sh*t in order
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 1 month ago '15        #23
AmillionMo 10 heat pts10
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 chrishansen88 said
Bought my home 3 years ago at 28

I live in SoCal I.E to be exact not expensive as L.a, San Diego or the OC but it’s still a prime location and can be done if you have your finances and sh*t in order
For how much?

 1 month ago '16        #24
Itsjustmefools 2 heat pts
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 nore 707 said
Bought my first house in Texas for 142k mortgage was about $775 not including property tax. I paid about 350 extra on just principle for about 5 years. House is now worth 150k I only owe 100k and getting it refinances to drop my payment to 450. Renting out and making an extra 300 a month. Buying a house where you pay more on principle every month is the way to go. It lowers your interest rate and helps you gain equity fast. That’s my advice when you buy a house go for a smaller or cheaper place and then put extra payments on principle and you’ll see your equity grow rapidly and if you’re in a tight squeeze for money you can just make a normal payment for a month.
Dam
Man U got r*ped!

 1 month ago '16        #25
Itsjustmefools 2 heat pts
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If married or what ever don’t ever use two incomes to qualify. If you do make sure do go below the approved amount.

If you do two incomes to qualify and one of you lose your job it’s a wrap for the mortgage
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