What you need from your home will change as your life changes. While no one can predict life\u2019s curveballs, you can get great advice from veterans of the real estate industry. To find out how your real estate and mortgage considerations should change in your 20s, 30s, and 40s, we went straight to the source. These expert tips can help you make informed decisions, whether you\u2019re a first-time buyer or ready for something different.<\/p>\n
Real estate advice for 20-somethings<\/strong><\/p>\n Make a broad plan.<\/em> \u201cMy advice: Pay yourself first, then pay your bills, then you can have what\u2019s left over for fun. If you have nothing left over for fun, then cut your bills or find a way to earn more money,\u201d says Clark Bowman of Coldwell Banker Residential Real Estate in Sarasota, FL. \u201cSave at least $5,000 to $10,000, then stop renting and buy your first house. Take out an FHA loan with 3.5% down or a conventional loan with 5% down. Look for a foreclosure or short sale that has some equity built in already. Then find a real estate agent who knows how to get you into the home of your dreams.\u201d<\/p>\n Conquer the mortgage monster early, and choose your weapon wisely.<\/em> \u201cAs a first-time buyer, it\u2019s important to complete a preapproval early to determine what types of loans are available to you,\u201d says Jason Knee, senior loan officer at Citizens Bank in Marlton, NJ. \u201cIt often makes sense to evaluate a few loan options, while considering the length of time you are likely to own the home. Fixed rates are the most popular, but if you plan to keep the home for less than 10 years, it may make sense to consider an adjustable-rate mortgage.\u201d<\/p>\n Check your credit report.<\/em> \u201cOne of the most important things you should do months ahead of home-buying season is to check your credit reports at Annualcreditreport.com. There, you can obtain your Equifax, Experian, and TransUnion credit reports for free,\u201d says SaraEllen Hutchison, an attorney in Seattle, WA. Hutchison represents individuals with legal claims under the Fair Credit Reporting Act, a consumer protection measure. \u201cIt\u2019s awful to find out right when you\u2019re trying to buy your dream home that someone else\u2019s collection accounts and bad debts are littered all over your credit report. This is often the result of a \u2018mixed credit file,\u2019 where the credit-reporting agency mixes up your credit file with someone else\u2019s credit file in their big databases. Many younger and first-time homebuyers mistakenly believe that they should go to a credit-repair company and pay hundreds of dollars or more to \u2018repair\u2019 their credit in this situation. That\u2019s the last place you should go if you have good credit but someone else is the problem.\u201d<\/p>\n Consider a new-construction home. <\/em>New homes need much less maintenance and should not need any major improvements for years to come. They also are more energy-efficient and save on your energy costs. Plus, many builders offer help with closing costs and have different financing options with their preferred lenders. But there are other benefits too. Your homeowners insurance could be cheaper as well.<\/p>\n Make sure you have a financial cushion for unexpected costs.<\/em> In your 20s, saving your down payment can be a strain. But you\u2019ll also have the additional costs of homeownership: furnishing your home, buying lawn equipment, maintenance, and more. It\u2019s important to understand these potential costs and plan for them. One option? Ask the sellers to include a home warranty \u2014 even if you\u2019re buying new construction. \u201cFor a financially stretched first-time homebuyer, it\u2019s important to know that a home warranty covers what homeowners insurance doesn\u2019t: the repair and replacement of home systems and appliances,\u201d says Dave Quandt, vice president of field operations at American Home Shield, a warranty provider.<\/p>\n Think long term.<\/em> \u201cAsk yourself: \u2018How long do I plan on staying in this home?\u2019\u201d suggests Joan Kagan, sales manager at TripleMint Real Estate in New York, NY. \u201cWith closing costs, broker fees, and changing market conditions, you may not make a profit if you sell again after just a few years.\u201d Most experts suggest buyers stay put for at least five years. That lets you build equity and gives your real estate investment time to increase in value.<\/p>\n In your 30s? Consider your lifestyle<\/strong><\/p>\n Reevaluate your priorities.<\/em> Upgrading to a larger home is often a priority for 30-something homebuyers. But don\u2019t just think about how much space you\u2019ll need. \u201cConsider school district, quality of life, and access to major routes of transportation and amenities,\u201d says Michael Kelczewski, a real estate agent with Brandywine Fine Properties Sotheby\u2019s International Realty in Wilmington, DE. \u201cUse caution when buying bigger,\u201d agrees Dan Garrison, a real estate agent with Coldwell Banker in Charleston, SC. \u201cJust because you may be able to afford more now doesn\u2019t always make it the correct decision for your budget.\u201d<\/p>\n Don\u2019t overimprove your home.<\/em> \u201cWhen purchasing a home in need of upgrades, be careful not to overimprove for the neighborhood,\u201d says Emily Restifo, a real estate agent in New Canaan, CT. \u201cWhile buyers may appreciate the nickel faucets and the high-end finishes, they will not pay for them beyond the value of the area.\u201d<\/p>\n Time your home sale with your next home purchase.<\/em> \u201cBuying and selling a home at the same time can be a scary task,\u201d says Jason Knee. \u201cTiming is important, and having a seasoned real estate agent will prove to be valuable here. Often, they will negotiate on your behalf to give you time to vacate your home after selling. This certainly makes the moving process a little easier.\u201d<\/p>\n Your 40s : Reassess your needs<\/strong><\/p>\n Focus on your lifestyle, not your age.<\/em> \u201cBuyers in their 40s have tough decisions depending on where they are in their stage of life,\u201d says Garrison. \u201cI have worked with 41-year-old buyers who have a 3-year-old at home, and 49-year-old buyers that have a teenager ready to start searching for colleges. Both have drastically different current and future budgets for home buying.\u201d Bottom line? Your real estate decisions in your 40s should reflect your needs right now. But if you have teenagers, suggests Garrison, \u201cConsider a smaller property, as you may be an empty nester sooner than you think.\u201d<\/p>\n Don\u2019t assume it\u2019s too early to downsize.<\/em> If you have young children, this might not resonate with you, but for many 40-somethings, the empty-nest phase is right around the corner. \u201cA lot of people this age are busy, enjoy traveling, and don\u2019t want to be consumed with a lot of home and yard maintenance,\u201d says Lisa Sinn, a real estate agent with Keller Williams in San Antonio, TX. \u201cGenerally, when people downsize, their mortgage payments are lower and so are their monthly expenses. That frees up money for lifestyle upgrades, traveling, saving for retirement, etc.\u201d<\/p>\n Get serious about paying off that mortgage.<\/em> \u201cShorter-term loans tend to be more appropriate for those in their 40s and beyond,\u201d says Knee. \u201cIf most of the major life expenses are behind you, it may make sense to start paying your home off sooner.\u201d Knee urges not to forget that having a mortgage does provide tax benefits, though. Be sure to speak with a financial adviser to find out the implications of early payoff. \u201cIn some cases, paying your loan off too soon might not be the right fit for you,\u201d he says.<\/p>\n Consider investing in real estate.<\/em> If you can afford to buy a second home in a resort area, renting it out can generate additional income and an opportunity to enjoy the property yourself. With apps, websites, and social media, managing and marketing vacation properties is easier than ever, says Kelczewski. But don\u2019t take on a second property if it means putting less cash toward retirement.<\/p>\n