Buying a House Right Out of College: The Pros & Cons

We’ve all had the thought at one point or another during our college years. Sitting around your dilapidated (but comfy) rental house with your roommates, someone throws it out there – wouldn’t it be great if we owned this place? We could do whatever we wanted!

But before you drift away into thoughts of backyard pools with slides coming from the roof, or your own, fully-stocked basement bar, you should keep a few things in mind. Sure, there are a lot of solid benefits to owning a home, but making the decision to buy over renting, right out of college, is a choice you should make only after a lot of thought and research. In other words, make sure you know your pros and cons before pulling out your checkbook.

The Pros

Many may counsel you against it, but there are some benefits to starting your home-owning career early. For starters, if you’re looking at the long game, it’s currently a great time to get a low interest rate on a mortgage. The 1-year average mortgage rate recorded in November was listed at 2.57 percent by Freddie Mac, and the average is still trending downward. The economic downturn has played havoc with the economy as a whole, but for first-time home buyers, interest rates are pretty attractive.

If you can find the right property, you might be able to get away with owning for the same cost of renting. If so, building your own equity (instead of your landlord’s) is a pretty smart move. Several calculators out there will help you break down the math.

And just like you realized in your own college pad, being the owner comes with a certain level of freedom. When you’re the owner, there’s no one to stop you from painting the bathroom chartreuse, or from knocking out that extra wall (just make sure it isn’t load bearing first). If you have some extra rooms, you also have the prerogative to rent them out, supplementing your other income.

The Cons

Before you start browsing for your own lair, however, remember Spider-Man’s mantra – With great power comes great responsibility. And unless you’re ready for it, the responsibility that comes with home ownership might not be something you’re ready for straight out of college.

A mortgage is a pretty hefty load to carry. Unless your degree is in a lucrative field with plenty of job openings, most new grads start off in entry-level positions when they enter the job world. Unless you can reliably secure a dependable, healthy income stream, you may not have the cash flow to keep up with a mortgage. Sure, many grads can get their parents to co-sign on a loan, but that can come with the greater cost of straining family relationships. Make sure you have the dough before taking the plunge.

The finances aren’t the only new responsibilities that will come with your first home. All those ‘little’ things you called the landlord to take care of in college? Well, those are your issues to deal with now. From maintenance to snow removal, replacing busted pipes to dealing with pest control, all of those headaches are now yours. And you’ll have to pull out your wallet for nearly every one of these new responsibilities.

Another aspect that you may consider a negative is the decrease in mobility that comes with investing in a house. Settling down might be your idea of heaven – but then again, it might not be, particularly if you have to relocate to find a job with the salary to support a mortgage. Are you happy enough with your neighborhood, city, state (and frankly, your current relationship) to dwell there for a number of years? If so – wonderful. But if the thought of putting down roots straight out of college makes you cringe, you might want to think a little longer before making that commitment.

Buying a house while the ink is still drying on your diploma isn’t necessarily a bad thing. It isn’t necessarily a good thing, either. But it is one of the most important decisions you’ll make in your adult life. If you’re ready to be an adult when you leave college, it might be a smart investment, and save you thousands of dollars later in life. But if you’re not ready to take that step yet, you should consider other options.

Lin Rice is a freelance writer working out of the central Ohio region. He writes on a number organizations including Movoto Real Estate. Topics he has written about include online learning and the occasional piece of fiction.

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