Can You Own a Home in Your 30s?

For anyone who has just started a family or looking to start one, owning a home is the biggest priority. But deciding when to buy a house and the whole ordeal can be stressful, with many factors to consider. 

The best time to buy a home is when you are financially ready. And as you approach your mid-career in your 30s, with solid income and being relatively stable, the recurring thoughts of owning a place you can call yours became a norm. 

Should I take a mortgage? Or should I save more and buy a house in cash? Should I buy an apartment or construct a solid mansion back in my hometown? Am I better off investing this money and building a house later? All these are questions that will be racing in your head. 

This article will explore all the factors you ought to consider, the home buying option available, the risk involved, and everything in between.

Getting Ready for Home Ownership

Before you decide to own a home, you should understand the bare minimum conditions you must meet. Once you make up your mind, the buying process might be the easiest of all the processes involved—the actual challenge starts when the building is in your name. 

Homeownership is an expensive and time-consuming undertaking; here is a checklist to help you get ready:

Can you afford it?: It is paramount for you to ensure that buying your first home won't affect your other financial goals. Education planning for your children and other family expenses, for instance, should be your priority. Any financial step you decide to take shouldn't burden your family. 

Protect your assets: Home ownership is a money-guzzling investment. Before embarking on this journey, ensure you have enough money to see it through, and you won't have to sell other assets to finance your house construction. 

Should you take a mortgage?: Before taking this route, understand the risk of defaulting and ensure you have a solid income to avoid it. Setting up passive income streams and getting income protection insurance should be your first step to protect yourself and mitigate the possibility of defaulting. 

Homeownership responsibility: It can be expensive to own a house: all the recurring costs and bills you didn't have to consider when renting fall on your shoulders. You will have to pay for everything from home maintenance, home insurance, land rates, etc. When all these bills add up, they shouldn't affect your family's current lifestyle. 

Assess the risk: While a house built in a prime area is likely to hold to or increase its value, don't write off the risks of your home losing its value in the future. Matters outside your control, including the State of the economy, environmental disasters, or urban blight, can affect your house value.

How to Buy a Home

There are several ways to buy a home. The option you choose will be determined by how much you are looking to spend, how fast you want the process to be and how much home ownership control you wish to have straight away.

Here are the four most common ways to buy a home and the pros and cons that come with each option.

1: Save and Buy in Cash 

This method is one of the most common paths to homeownership. If you have saved enough, buying a house is the easiest and least expensive option. But there are things to think about, as is with every other route available.

Pros

• Bargaining power as you can command negotiations and ask for more discounts when buying in cash
• You can avoid a magnitude of fees, including interest rates, mortgage insurance fees, and other fees associated with a loan application. 
• Simple and faster closing; the seller will be looking to close the deal faster, and you avoid the waiting period associated with mortgage and joint venture
• You get to own the house outright and have it in your name

Cons

• Your money gets tied up in your house, and it can't generate any income 
• You won't have many options as you are restricted by the cash you have on hand
• You still get to pay other fees, including taxes and homeowners insurance. 

Read Also: Should I Buy A House? 5 Signs That You Are Ready

2: Rent to Buy

This process involves signing a lease with a seller to rent a house for a specified number of months or years with an option to buy before or after the expiration of the lease. You will pay extra money in rent that will go towards your down payment for the house. 

Depending on the agreement with the seller, you will either be legally obligated to buy the house or have the option to move out when the lease expires.

Pros

• No hefty down-payment as it is spread out over months and years
• You can keep building your credit score to qualify for a high mortgage 
• You get the house at current market value instead of future value, which could be higher 
• You get to know if a home really suits you. If it doesn’t, you ask for lease termination 

Cons

• You forfeit all money made towards the downpayment if you cancel the lease
• You will handle all the home maintenance, security, and insurance fees  
• The seller can cancel your lease if you are not legally obligated to buy. They can sell the property to another party 

3: Joint Venture 

This process involves land owners partnering with a real estate agency to develop a house on their land, and in return, you pay the agency rent over a specified number of years. At the end of repayment, you get to own the house. 

Alternatively, they can construct more than one unit on your land, offer you a few units and keep the rest for themselves. They will either choose to rent out or sell the properties they keep.

Pros

• Gains and risks are shared between you and the partnering party
• You get access to development expertise 
• Provide income as the developer can choose to share a percentage of profits with you.
• The developer will handle the majority of legal and survey bills

Cons

• The land has to be in a prime location to find partners easily 
• You don't have control over what type of houses are built on the land
• Unforeseen conflicts can derail the projects, especially if you fall out with the developer 

4: Mortgage 

This process involves taking a loan from a bank or other lenders like a SACCO to finance the purchasing of a house. The home will act as collateral as you repay what you borrowed plus interest which can be fixed or variable. 

According to your agreement with the lender, you will have to pay a down payment of at least 5% of the house value with the promise to repay the rest over a certain number of years. 

Pros

• Easier to get a house as less upfront money is required to get started
• Less money is tied in the house, leaving you with extra money to invest in other ventures
• The monthly payments, albeit higher, will just be replacing rent, but they contributed towards homeownership 

Cons

• All fees that come along with house ownership are on you. That is insurance, maintenance bills, and land rates.
• Extended debt can be stressful for you
• Risk of losing the house in case of default 
• High and fluctuating interest rates might have you pay almost double the market value.

Should you own a Home in your 30s?

Even though you have found financial stability, built up some investments, and increased your income, at 30, there is still more life ahead of you. Before deciding to buy a house, here are a few things to factor into your decision-making process. 

The uncertainties: What are your career projections? Are you planning to change careers, or are there possibilities of getting transferred to a different location? Are you planning to increase the family size and maybe have more kids? Where do you plan to retire? A home should mostly align with your plans. 

Financial health: In your 30s, you’ve barely reached your prime financial health, and investing in a house can affect how much you earn and invest now. Waiting for a decade will help you save more and buy a dream house in cash by avoiding mortgages and other debts. 

Renting is cheaper: You should assess if you have the time for home maintenance and money to pay the recurring costs of owning a home. You could be dedicating more time and money to your home repairs, the time you could spend improving your career prospects by gaining new skills. 

Dead capital: Using all your savings to buy a home might not be a better financial move, at least in the short term. Using the money to invest in other channels (Like MMFs) can generate income that can cover rent and help you save more. You can then choose to buy a home later when you’re more liquid. 

Read Also: 11 Worst Money Management Mistakes to Avoid.

Preparing to Buy a House

A lot can happen between the day you lay the foundation brick and when you move into your new house. 

To prepare for all the emergencies that can arise like loss of income, accidents, economic collapse, or any other thing that can derail your construction process, you should ensure you have:

• Solid Emergency Fund
• Multiple sources of income
• Debt under control 
• Proper insurance cover 
• Downpayment for a house (If you are going the mortgage route) 

Read Also: 7 Mid-Year Tips to Get Your Finances Back on Track.

Wrapping Up 

Buying a home is a great financial undertaking and the first step to building generational wealth. This is why you can't just afford to wing it. Any mistake made at this stage has the potential to spiral and affect current and future financial goals.

Before making a decision, do thorough research, weigh all your options, have your bases covered, and most importantly, ensure it aligns with all your future plans.