There are so many choices in home buying and it feels like each decision is a crucial one. Do I buy a House? Townhouse? Condo? What’s the difference? Which one has the most benefits? Do you want to start a life in the city, or the suburbs? Are you going to live in this house for years and years to come or is it to move into something better after a few? That is what it comes down to, buy a starter home or buy one that you’ll live in for years.
Before it was a common place to jump into a mortgage, families would buy smaller homes to build equity and work their way up in steps. However a large amount of new home buyers are not opting for this long time plan.
Where are you at?
Not just financially although that question is really important. But where are you at in your life. We aren’t necessarily saying, “what age are you?” but the question comes down a few aspects: do you have children at home, do have plans in the next few years to expand your family, is it likely in the next few years that you household will expand? In terms of your life take the number of people or potential people in your household. Are you going to need the space, or potentially need the space in the next two years or so.
In tandem with the number of people in your household also take into consideration what you are used to. If you are trying to take on the home of your dreams, will it mean compromising your lifestyle and making major adjustments to be able to afford the mortgage? Be realistic in regards to what you are willing, and capable of changing.
A starter home is not for anyone who is looking for a long duration of time without change. While a starter home is great for someone who wants to buy, but wants their options to stay open. For many growing families starter homes are great as you can build equity and then if needed move into something bigger.
What you will be able to put down is going to play a crucial role in what you will be able to get into. Usually, starter homes are cheaper, which would mean less money down initially and most often a smaller monthly payment depending on your loan terms.
When evaluating your finances ensure that you evaluate what you will be able to afford with all of your other current monthly bills. Cable, utility, and payments towards any other obligations. Take into account any possible monthly payment you could have.
Investing or, not?
Most often starter homes are not the greatest investment, although they hold their value well and there isn’t much opportunity for you to lose money there isn’t a whole lot of chance that you would be significantly increasing your home’s value without costly renovations. Whereas your dream home may be an investment that is viewed differently when taking into consideration the amount of money you are paying into your loan every month.