As a first-time buyer, should you be looking for a starter home or a forever home? Starter homes are smaller homes and condos typically purchased by younger buyers looking to stay in one place for 3 to 5 years. A forever home is one you buy intending to live there for a very long time. Buying a home is one of the biggest purchases you will ever make, so you must consider your options carefully. In this article, we’ll discuss the pros and cons of each to help make your decision a little easier.
Affordability
For most people, cost is a major factor when it comes to deciding on a type of home to purchase. Starter homes are more affordable, which is why they’re popular among first-time buyers. In fact, CNN reports that buying a starter home is cheaper than renting in many cities. They also tend to have lower property taxes and require less spending on furniture due to their smaller size.
Whether you’re looking for a starter home or a forever home, be sure to evaluate your mortgage options carefully so you can keep more money in your pocket. For example, FHA loans are insured by the Federal Housing Administration (FHA), so they allow for lower mortgage rates and down payment amounts. Mortgages for America, a nationwide non-profit mortgage company, can help you explore your loan program options!
Maintenance and Upkeep
When it comes to regular maintenance and upkeep, starter homes are the better bet. Smaller homes are much easier to maintain, especially condos and semi-detached homes. Of course, because starter homes are meant to be more affordable, they can also be older. This means they often come with more unexpected maintenance problems.
Regardless of which type of home you buy, be sure to insure your home against major maintenance issues. Basic homeowners insurance typically doesn’t cover appliances or home systems, including plumbing, electrical, and HVAC systems. If you want coverage beyond the structure of your home, you’ll need a home warranty. Look around online for home warranty plans that are right for you!
Opportunity to Earn Money on Your Investment
If you’re looking to buy a home as an investment, a forever home probably isn’t what you want. Regardless of how much the home increases in value while you own it, you’ll never see a return on your investment if you live in the place forever! Starter homes, on the other hand, offer several money-making opportunities. You could sell in a couple of years when the market is hot or hold onto the home and rent it out to earn passive income while you’re living in your forever home. SmartAsset.com explains that buying an investment property can be a great move for younger buyers because they can take advantage of FHA loans and have greater overall risk tolerance.
Comfort and Flexibility
One of the major draws of a forever home is the flexibility to make the place your own. You can invest in additions and upgrades that will enhance your quality of life without worrying about your ROI. You can put down roots and really get to know your community. You’ll have plenty of room to support your growing family and pursue passion projects, like growing fresh vegetables in the yard or starting a business in the garage.
On the other hand, starter homes offer more freedom. If you decide that you don’t like the home or surrounding area as much as you did initially, you can sell and move somewhere new relatively easily. Go with a starter home if you’re not ready to commit to a home for at least the next 10 to 20 years.
When it comes to buying your first home, you have many important decisions to make. First and foremost, you must decide whether you want to buy a temporary starter home or a home that will serve your family for decades to come. Consider the pros and cons of each option so you can make the right decision!
Ready to buy a home? Get a mortgage quote from Mortgages for America so you can budget for your big purchase!
