Starter Homes For Sale vs. Forever Homes For Sale
Should you buy a “starter home” or wait for your “forever home”
Chances are if you’ve found the perfect home, you may not want to wait to purchase it, but there are several great reasons to look for a starter home first. Whether you’re just starting to look at houses for sale or townhomes for sale to help with your growing family, you can find great deals on real estate that won’t stretch your budget. Because your dream home may cost more and include higher insurance and utilities, looking for real estate that’s in a lower budget can work to your advantage. Let’s take a look at a few great reasons to buy a starter home or forever home. That way as you look at houses for sale and townhomes for sale, you can decide which is best for your needs now.
Buying Your Dream House Now
When you find a dream home, chances are it has all the bells and whistles! Yup, you’ve researched it and found the right neighborhood near the best schools and it has a pool and garage, too. These are all great things to check off your list, but let’s factor in a few details about that dream home that you might not have thought of:
The mortgage: For starters, a bigger home will cost more. We’re not just talking about your monthly mortgage payment, but you may need to put down a lot more money. At times you can get away with 5% down or 10%, but for some homes, the bank may require 20% to ensure you can afford it and are serious about making payments. Be ready for a higher mortgage if you can’t put less down.
Your insurance: You will also have to pay more in your insurance. Home owner’s insurance is a requirement, and the more space and stuff you have, the more expensive your insurance related costs. Price it out to see what your annual payment will come out to as it’s an added cost you might not have been ready for.
The utilities: With a bigger homes comes higher heating and air conditioning bills. Depending on where you live, you may need to spend a lot in energy costs for cooling a larger home. Factor in the insulation, energy efficient appliances and solar panels as these are all ways to save on utilities. With heating in the winter you may also need to pay for oil for your furnace and other charges related to boiler repairs, routine service and upgrades.
With the aforementioned fees, if you have a big nest egg and you’ve been saving a lot, having your dream home might be just what you want, but let’s take a look at reasons why you may want to get a starter home instead.
Getting a Starter Home Now
Tax savings: A starter home can be a cost-saver right away. Factor in that you’re getting the tax break because you own a home – no matter the size. That means that if you purchase a cheap condo or co-op or you can still get the tax incentive.
Lower utilities: An added benefit is that you will pay less in utilities for a smaller home and this means you may have more money that you can save towards that future dream home!
A lower mortgage rate: A great reason to go for a starter home is that you can get a mortgage that you can easily afford. The bank looks at your credit, spending history, pay stubs and other financial records to determine how much house you can afford. By coming under this and not trying to stretch your budget each month, it’s easier to make payments and you won’t risk payments or possibly going into default if you or your spouse is out of work.
Ultimately, the decision is yours, but factor in that if you are strapped for cash, the bank may need convincing if you really want to push for a forever home but can’t show proof that you’re ready in your financial records and savings. Whether you’re new to real estate or you’ve been working with a realtor for some time, finding houses for sale that fit your budget is a must. Whether its condos, co-ops or townhomes for sale, get pre-qualified so you will know how much house you can afford. Do this first so you don’t fall in love with a home you can’t afford. That way when the right house comes along, you can get ready to enjoy your dream home, even if it isn’t your forever home just yet!