Pop quiz: What’s the average age when most people buy their first home? Thirty-four, according to the credit reporting company Experian. And if you’re near that age and thinking of buying a home, the decision to proceed probably has a lot to do with your life’s journey thus far.
“Homebuyers in their 30s tend to be more financially mature,” says Phong Truong, a Mortgage Advisor with The Financial Suit Team of NEXA Mortgage in Houston, Texas. “They usually have a larger amount of savings and a partner who’s involved with the purchase. Plus, they’ve had time to establish credit, which can qualify them for a better mortgage rate.”
If you’re in your 30s and thinking about buying your first home or upgrading to a larger house, here are crucial things to consider to make your homebuying dreams a reality.
Is it the right time for you to buy?
The best time to buy a home depends on two personal and crucial questions.
“First, can a buyer commit to being in one location, in one home, for the next five years or so?” asks Khai Tran, Team leader of CGP Realty Group, in Houston, Texas. Ask yourself what your near-future goals are, as well as where you want to be in the next five to 10 years.
“Secondly, can a buyer commit to the upkeep that’s required on a home?” adds Tran. “If the answer to these questions is yes, then it might make sense to buy.”
If you’re renting, crunch the numbers on buying a home or condo, says Hien Le, a Realtor with CGP Realty Group in Houston, Texas. In many areas of the country, it can be cheaper to buy than rent. (Check out FREE Home Pre-Qualifier to see How much you can afford for).
Do you already own a home?
Did you buy a starter home in your 20s? Phong suggests looking at your home’s value and your mortgage balance. Those figures will help you to decide if you have enough equity to sell your current home and buy another one.
“It can make financial sense to upgrade, considering that most of the time, real estate appreciates,” adds Phong.
What kind of home do you need?
Buying your first home? Khai Tran, team leader of CGP Realty, a Houston, TX-based real estate group, urges all 30-something homebuyers to drill down on whatever is likely to serve their future needs.
“I find that people in their 30s tend to be trying to create deep roots in a city or neighborhood,” says Tran. “And they tend to focus on trying to find long-term perfection in their home, more so than any other age group.”
So think about whether or not the home you have your eye on will still work if you change jobs. Is it located in a good school district? Does it offer enough space for a home office? Many homebuyers in their 30s also look for comfort and convenience, such as being close to a grocery store or restaurant.
You don’t necessarily need to be looking at a forever home, however. Your life will invariably be different in your 50s and 60s.
Consider going big
About 20% of millennial homebuyers are looking for a large home to accommodate family changes, such as marriage or children, says Tran.
“You’re in a growth stage in your 30s,” adds Hien Le. “In your 20s, you buy an affordable home just so you can get a stake on the market, keep control of your expenses, and build your savings. In your 30s, you need to buy what you need to raise a family.”
Homebuyers ages 31 and 40 had a median income of $105,600 in 2019, according to a National Association of Realtors report. Almost 70% of buyers in this age group are married couples, and 30% have children.
So if you can afford it, buying a larger home may be a good idea. But, if you can’t, take a step back.
“If you’re buying more than you need in proportion to your income, it’s stressful and a disadvantage, because you’re not saving money,” says Tran.
He recommends keeping your mortgage payment at a third or less of your income.
Getting a mortgage pre-approval is an essential first step in your home buying process—especially if you’re purchasing a more expensive home.
“Many people have no idea how their credit looks, or why it can look different to a lender versus reviewing it on their own,” says Truong. “Having a mortgage advisor consultation can provide a clearer picture and allow a homebuyer to make a smarter financial decision.”
Also, make sure you can afford the down payment for a new home, while retaining an emergency fund to cover unexpected costs, such as repairs.
If buying a first home or upsizing is a possibility in your near future, congratulations!
“Getting your ducks in a row in your 30s will pay dividends in the coming decades of your life,” says Tran.
Ready to buy? Get started today by requesting a no-obligation consultation with one of our mortgage advisors at The Financial Suit Team!