Oct 26, 2021 03:39 PM EDT
Getting A Foot On The Property Ladder: A Dream Or Reality For Today's Grads?
Homeownership has long been considered the ultimate American Dream, but 21% of recent graduates think owning their own home is out of their reach. It does, after all, take a lot of hard work, sacrifice, and savings to buy a property. But while getting control of your personal finances is one of the biggest challenges you'll likely face when leaving college, it doesn't mean you can't get on the property ladder. Even if you have student loan debt, you may not have to wait until your thirties or forties to own your own home, especially if you went far in your education.
Graduate Home Ownership Rates
The more advanced your education, the better position you are in to own your home. Law and medical school graduates have a homeownership rate of around 76%, closely followed by graduate school at 73.6% and those with bachelor's degrees at 67.3%. Meanwhile, people with a high-school degree or less have a 40.5% ownership rate, and those with a high school diploma have 56.4%. But regardless of the type of degree you have, if you need to take out a mortgage to buy your home, there are some key things you can do to put yourself in a much better position to get a mortgage and your first foot on the property ladder.
Student Loan Debt And Mortgages
The average student loan debt of people who graduated in 2020 ranges from $26,627 for public college graduates and $32,029 for those who attended private colleges. Fortunately, having student debt will stop you from taking out a mortgage. You can still buy your home if you have student debt as long as you have a reliable income and handle your payments. Mortgage expert Ryan Kelley recommends first-time buyers review their credit score with the top three credit score agencies before applying for a mortgage. That way, you can check for any incorrect charges on your file and know how you look to loan companies.
Change Your City
If you think you cannot afford to buy a home in your city as a recent graduate, don't be afraid to look outside your current city for somewhere more affordable. Some of the most affordable cities in the US to live in are Detroit, Michigan, Cleveland, and Toledo in Ohio, Memphis in Tennessee, Montgomery in Alabama, and Kansas City, Kansas. While the salary in these areas may be lower than in others, you can expect to pay less when it comes to your utilities, food, and real estate costs. And you don't have to stay there forever. Once you've worked for a few years and built up equity you can look to move up the ladder and purchase somewhere in a more desirable location.
If you are financially prepared when you graduate, are ready to make certain compromises, and ensure you take good advice and make smart decisions, buying your own home could very well be one of the greatest financial decisions you will make.
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