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Starter Homes vs. Forever Homes: Which is Right for You?
Dated: September 22 2020
When you’re a first-time homebuyer, the first thing on your mind is probably, “how much home can I afford?” and rightfully so! Knowing how much you qualify for is the first step to buying a home.
But here’s another crucial detail to consider: should you buy a starter home or a forever home?
Starter Home vs Forever Home: What’s the Difference?
You can think of a starter home as a jumping off point in homeownership. When you buy a starter home, you probably don’t intend to live there for more than a few years.
However, with a forever home, you’ll likely plan on living there for many years –maybe even for the rest of your life! So when comparing the two options, have in mind how time you intend to live in the home and how that fits into your goals.
Reasons to Choose a Starter Home
Potentially more affordable than a forever home.
Condos and small houses are a favorite starter home among first-time homebuyers. A smaller house is likely to fit your budget better, and if you’re single or have a small family, a one to two-bedroom may be all you need anyway.
A lower-priced, modest home means a smaller downpayment too! When you pair that with an FHA loan that requires as little as 3.5% down, you can see why some are willing to sacrifice space (for a while, anyway) to buy a starter home.
Desire to start investing in your future.
You’d think that a mortgage payment is more than rent, but often the opposite is true. Even if the overall house payment is slightly higher than your current rent, what you get in return is so much more.
You can think of a mortgage payment as an investment in your future, and with every payment, you own more and more of the house.
Plus the real estate market helps you out by possibly increasing the value of your home. Can your rent payment do that?
Improve your investment without commitment.
Even if you don’t make any improvements to your home, the market could work in your favor and increase the value. But if you want to help it along, consider making some upgrades!
The key to home improvements in starter homes is to focus on those with a reasonable return on investment. So before you gut out the bathroom for a complete remodel, look into less drastic upgrades like replacing the tile and sink.
Another thing to consider, at least for style purposes, is to use designs that most appealing to homebuyers. So if you replace the kitchen countertop, consider a neutral colored granite instead of a stark black one. You’ll want to save those personal touches for your forever home.
Reasons to Choose a Forever Home
You already have or plan to have a family.
Space for a growing family is one of the most common reasons to buy a forever home. A condo for a 2-3 person family might be okay for a while, but eventually, you’ll want more space in case you add to your family, you want a yard for the kids to play in, or even just a large enough dining area entertain.
It’s a buyer's market.
When market conditions are in your favor, you definitely want to consider a forever home versus a starter home. Not only will get more home for your money, but you’ll have the piece of mind that you got the best rate and a payment you can afford.
You’re ready to set roots.
It’s comforting to know that you won’t be moving any time soon. You can settle in, make lasting friendships with your neighbors, upgrade your home just the way you like it knowing that this is your home to do as you please.
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