You’d think that buying a house would get easier the older you get. Sure, you’ll probably make a few mistakes the first time you buy a house when you’re young, full of hope and promise for the future, but by the time you’re on your second or third house, older and hopefully wiser, shouldn’t you be a pro? Surprisingly not. Over our years of experience, we’ve seen mistakes in home buying that changes from generation to generation, and some of them aren’t as easy to avoid as you’d think. Let’s break it down from the oldest to youngest generations.
The Silent Generation (Ages 74+)
While our oldest living generation is unlikely to start the homebuying process, it does happen occasionally, and it’s rarely a good financial decision. Even if they’re planning on getting out of the cold and moving to Central Florida, there are a wide range of options that might be better for both short-term and long-term planning than a 15- or 30-year mortgage. The biggest risk taken by this generation tends to be poor financial planning for their future, including being taken advantage of with so-called “reverse mortgages”.
Baby Boomers (Ages 55-73)
In many situations, baby boomers have paid off a house completely and will sometimes make the mistake of buying a second one as well as a vacation home. Eventually, they fall in love with the vacation home’s location and want to move there permanently. This leaves them stuck with a mortgage they don’t want in an area where they don’t want to live anymore. We recommend starting off slowly with a vacation home, and exploring temporary rentals or time shares until making the choice to move permanently. Relocating can be costly and hard to do again once you reach a certain age, so prudence is a good idea.
Gen X (42-55)
This generation tends to overestimate their budget. They’re ready for a big home with all of the amenities they dreamed of in their 20s, so they are willing to consider a bigger mortgage than they should. While this might not be a problem at first, twenty or thirty years down the road it could present a whole host of difficulties.
The youngest home-buying generation finds itself in a financial trap many times by getting Adjustable Rate Mortgages (link this to ARM post), or ARMs. While this is initially appealing because of the low interest rate at first, once it starts increasing, unless their income increases on the same scale or better, it can turn into a challenge to make the monthly mortgage payment. ARMs have a lot of risk and no guarantees, and we usually recommend that a fixed rate loan is a better option for a buyer’s first mortgage loan.
Generation Z (6-23)
The only houses they’re probably buying are in-game purchases and action figure and doll sets, but if we were to guess what future issues might arise for Generation Z, it’ll involve the volatility of emerging cryptocurrencies, which will seem attractive because of their low barrier to entry and capabilities without using banks or loan companies to finance the purchase of a home. Or maybe their biggest problem will be building fences strong enough to keep the zombie hordes out. Only time will tell.
Whether you’re considering purchasing your first home, or you’ve bought a dozen, it’s important to use caution and to seek out the input of an expert before any purchase this size. Here at Meridian Realty Group, we can advise you on the best way to invest in a home that can help you avoid the many pitfalls of buying and owning a home. Contact us today with your questions.