Leaving the comforts of mom and dad and stepping out into the real world is a challenging and rewarding experience.

It takes determination and maturity to effectively juggle personal and financial freedom. Many questions faced during this stage of life include, “Should I rent?” “How long should I rent?” “Is now the right time to buy a home in Alexandria, Arlington, or Washington DC? ”.

One of the most important lessons to learn is how to manage and build your credit. Paying your bills on time will enable you to build a stable credit history and increase your overall credit scores. And don’t forget your landlord. When it’s time to purchase your first home, you’ll likely be required to provide proof that you’ve paid your rent on-time consistently. Building and protecting your credit will open the doors to lower interest rates and no money down programs when it’s time to buy your first home.

Also consider asking your parents for help when buying your first home. Many mortgage programs allow you to receive a gift for your down payment. This will help you lower your monthly mortgage payments and provide you with an added financial cushion in the buying experience.

It’s common for young professionals to purchase a new car after landing that first big job. That’s fine, but make sure that you don’t go overboard. An expensive car payment on your credit report will reduce the overall amount that you could get approved for your mortgage. And who wants to drive a flashy car and not own a home! A good rule of thumb is to try to keep your car payment less than 10% of your gross monthly income. Factor in fuel and insurance expenses. A more expensive car means more expensive insurance, and undoubtedly a larger car means higher fuel expenses.

If you decide to rent, consider getting a roommate. Sharing a two-bedroom apartment can be more economically feasible than renting a one-bedroom apartment where you bear the full responsibility of all utilities and other monthly expenses.

This is the time to see a financial planner. The power of compound interest is in rare form during this time of your life. Establish a pattern of putting money away automatically so that it is saved before it is spent, and you’ll be laying the foundation for a large nest egg. Don’t think that it’s uncool to talk about retirement now because the earlier you start planning, the better shape you’ll be in down the road.

We work with more and more buyers who are leaving the nest and coming to our metro area in hopes of purchasing a home in Alexandria, Arlington, or Washington DC.  We know the right loan programs, and the right questions to ask to help you reach your homeownership goals.