All I read about these days are how young people are flooded with debt. When I was paying off my student loans after I graduated, one of the jobs I had was doing door-to-door sales. One day I approached a house where four guys were playing basketball in the driveway. I asked if the owner of the home was available and one of the guys smiled and said he was the owner.
I was shocked – this guy was probably 25, and he OWNED this house?
At the time I was struggling to pay off my student loans, and I could barely scrape together rent, much less think about owning a home. The fact that this guy owned his house at such a young age truly stunned me and got me thinking.
The Rules Are The Same
I would never advise anyone to buy a home while they still had student loans. Although this is a personal preference I feel like it is probably a good idea for many people out there. I had about $10,000 left in loans when I bought my home, and it made everything more complicated.What I DID learn was that the habits you develop in aggressively paying off your student loans are the same ones that will help you save for a down payment and own a home faster that you thought possible.
Advantages To Home Ownership
Owning a home is all about equity. Every mortgage payment you make is actually money you’re investing. In the long run, your house WILL go up in value (notice there are no short term guarantees there), so not only will you make money when you sell (assuming you sell at the right time), but it will also be as if you lived rent-free for as long as you were in the home.
Disadvantages To Home Ownership
There are drawbacks of course. While renting may seem like throwing money away, you also don’t have to deal with repairs, insurance, property taxes, or anything else. It’s also much easier to relocate if you have to move for a job, a partner, or just because you want to. Most people decide that the pain-in-the-butt factor is worth owning a home, but it definitely isn’t for everyone.
While I did things in an inefficient order, one of the things that buying a home taught me was to start thinking long-term. Looking at the numbers, I knew I had to get rid of my debt so that my money could work for me instead of against me. Interest rates will kill you if you don’t pay attention, and paying 6% to 10% on student loan payments and up to 25% on credit card payments (25%!) will keep you in debt longer. There is a reason why Einstein said they are the most powerful in the universe after all!
Interest Rates For Mortgages Are LOW
Mortgage rates in Canada are extremely low right now. Ask your parents what their interest rate was when they bought their first home – 15-18% wasn’t uncommon. Compare that, for example, with BC Mortgage Rates are right around 3% according to www.mortgagerates.ca.
Rates can’t get much lower (and likely won’t), and house prices will continue to rise over the long-term. The sooner you can get in the better, but it takes proper planning and understanding of what you’re signing up for. Buying a home has been one of the best decisions I’ve ever made, and I urge you to get excited about the possibility and get rid of those student loans as soon as possible.