Young couples from all over the world have had the dream of purchasing a new home at time point or another. Those who have gone ahead and managed to achieve this dream have probably discovered that this is the largest expenditure they will ever make. And too, the possibility of owning real estate seems like a herculean obstacle to many young people, but with proper planning it is not impossible to achieve.
Young people today are getting used to setting up savings plans for their down payments when purchasing a new home. While being able to evaluate one's capacity to be disciplined enough to follow through, this too is a weapon in the arsenals of many couples just starting out. If there is one positive impact the recession has had, it is in solidifying some of these ideas in the minds of newcomers to real estate planning.
Each generation, the age at which young people enter the housing market gets lowered. This is because there has been an increase in the earning capacity of most individuals coupled with more lenient lending requirements. In the past it would have taken many years of disciplined effort to save enough money for buying a home. Nowadays, people in their twenties are earning enough to meet this requirement fairly quickly. This is a good thing, but there are shortcomings obviously.
Global interest rates are lower than the interest rates available a generation ago, which has had the effect of increasing the buying power of many young professionals. Younger professionals can now qualify for a residential mortgage because low interest rates have allowed these professionals to service a monthly mortgage payment as it now comprises a smaller percentage of their annual income.
Mortgage interest rates have also fallen considerable compared to the levels they had attained a few decades ago. They have fallen by more than 50 percent over the years. Considering the higher incomes earned by young people today, it is so much easier for them to meet monthly mortgage installments than it would have been in the past. This has also meant that they are able to buy much more expensive property than they would have been able to in the past.
The high levels of liquidity in the economy today have led to banks and mortgage lenders competing to give out loans for the purchase of homes. Their lending procedures have relaxed with time. It is even possible to walk in and get a pre approved loan if you have an outstanding credit history. You can apply for a mortgage and get it approved in a few days after the lender has analyses your capacity to service the mortgage.
Landlords in the recent past have started charging higher rents in an effort to meet taxes, utilities and other costs associated with owning an apartment building. Tenants on the other hand are beginning to understand that the rent they pay could easily be used as mortgage installments and the difference will be that they will be gaining equity in the house as the years go by, unlike when they are renting from someone else. This has led more young people to look for opportunities to take out a mortgage and own a home.
Buying as opposed to renting is the prudent path, particularly in this buyer's market. But the critical issue for any age buyer is ensuring their ability to pay the bills through thick and thin. This should be abundantly clear since the events of the last three years. Search and gain access to the house you can afford first, then make it into your dream home.