A “starter home” may be just right for now but not the place where you’d like to be for the next few decades. First-time homebuyers may be faced with this sometimes-difficult decision. It may seem foolish for some to invest time and all their saved-up money on a home that they do not envision as their dream home. However, the equity that can be built in a starter home may provide opportunities that continued renting does not afford. Owning a starter home may enable a homeowner to eventually purchase their more ideal property. Here are some factors that might help potential buyers decide if they should invest in a starter home or continue to save for a home into which to grow. Are you a typical first-time homeowner? Be honest with your answers to these questions since there are no right or wrong answers.
ONE: HOW DO YOU FORESEE YOUR FUTURE?
Investing in a forever home may require stability. To be realistic, homebuyers should plan to spend at least five years in a starter home and perhaps a decade or more in a forever home. Some important questions to consider might include:
- Are you in a serious relationship?
- Are you and a partner considering moving in together?
- Are you looking to have children sooner rather than later?
- Can you see yourself staying at your current job for the foreseeable future?
- Would you be open to new employment opportunities, even if they meant relocating?
- Are you still working on getting established?
If you see into the future and you want a place for your family to live for quite a while, a forever home may be your best choice. If, however, you foresee big change is coming with a move, a marriage, different employment, etc., a starter home may be a better option.
TWO: CAN YOU AFFORD A FOREVER HOME NOW?
You may foresee your ideal home as larger and with more amenities than a typical starter home; a higher price is inevitable. Affordability may be a key factor in your decision right now. Keep in mind that homes necessitate supplemental costs, such as utilities, homeowners’ insurance, property taxes, and maintenance; such costs may be relative to the size of the home and its features.
If money is not an issue and you feel comfortable with the financial responsibility, a forever home may be the right choice, but if you’re concerned that your dream home may actually be a burden, you may want to wait.
THREE: WILL YOU CONSIDER BEING A LANDLORD IN THE FUTURE?
What will you choose to do if you need to move in the next few years due to employment change or personal issues? Would you want to sell the home that is no longer your primary residence, or would you consider renting it out? Becoming a landlord may be advantageous if you can realize more in rent than your mortgage payment. However, finding good tenants, addressing maintenance issues, or relying on a property manager may present more headaches than what you think the potential profit is worth. A starter home in a good, well-located area may prove to be in high demand as a rental property; a larger forever-type home may be a better candidate for resale to a long-term new owner should you have to leave it. Are you wondering what it takes to get a mortgage?
Obviously, there are no perfect, universal answers to these considerations. The decision between a starter home or a forever home is extremely personal and possibly dependent on your specific time in your life. Weigh your options and begin your search!