Starter or Forever? Helping First-Time Home Buyers Make the Big Decision
With the economy doing better and more recent college graduates earning more, buying a home could very well be a reality for many young adults. Although you may have built-up your credit, saved up for a down payment and be at the point where you know that now is the time to buy a house, you still might be wondering âShould I buy a forever home or a starter home?âÂ
That cute two-bedroom cottage that you have your eye on might seem like the perfect home now, especially if your previous home was an apartment. But, what happens when you have kids and find out that the schools are not the best? Or, you end up having three girls and discover that, while your one bathroom was perfect when it was just the two of you, it just will not cut it anymore now that you have a home full of girls.
It can be disappointing to think that the home you can afford now may not be ideal years down the road. Although there are lots of opportunities to outgrow your first home quite quickly, buying a forever home might not be such a great idea either. There are lots of different variables that determine which is the right choice for you. Here are some things that can help you decide.
How much can you afford?
This is one of the most important questions to ask yourself. When it comes time to buy their first home, many would-be home buyers quickly discover that they do not have the budget for their dream home. It is better to choose the home that you can afford now rather than a more expensive one that you won't be able to afford years later.
When determining how much you can afford, take into account your estimated mortgage payment, mortgage insurance, homeowners insurance, taxes, utilities and homeowners association fees. Also, tack on an additional 1-4 percent per year for home repair costs. Make sure that you leave cushion when determining your budget. You never know what expenses might come up down the road.
Even though it might not be your forever home, buying a starter home can be a good move. The mortgage payments will be affordable, which leaves you more freedom and flexibility. If you decide that you do not want to go back to work right away after having kids, the mortgage on a starter house will be more manageable on one income.
What if I Can Afford My Forever Home?
If you do the math and determine that you can easily afford your forever home, should you take the plunge? That depends upon your goals. If you plan to live there for many years, then in most cases, it makes sense to buy a forever home. If you want to expand your family within a couple of years or have older relatives move in, then a forever home is probably the best choice. It does not make sense to buy a home that you know you will soon outgrow.
The bottom line when buying a home is to think about how much you can afford and your plans and goals for the near future.
Looking to buy a house? Need additional expert advice? Contact RE/MAX DFW Associates today. Re/MAX DFW Associates real estate agents can help you buy a house that is perfect for your needs.