Buying a new house is an exciting experience, but it is also a huge life milestone. It is sometimes difficult to know whether you should purchase an affordable starter home or instead build or buy a dream house. There are benefits and disadvantages to each option, so here are three things you should understand to help you make the right decision.
Know the Benefits of Each Option
There are different benefits to buying a starter home or your dream house. It is up to you to analyze your current stage of life and determine which option is most beneficial for your unique situation.
Starter homes are more affordable than move-up homes (i.e. second home, typically a larger house), which you may want to live in for the rest of your life. They require less upkeep. You may even be able to rent them out in the future and generate additional income. However, starter homes generally need more repairs than newer ones. They are usually small in size and sometimes can be harder to sell, if/when you need the equity.
Your forever home, however, will be large enough to accommodate a growing family. Buying your dream home also gives you the opportunity to put down roots so you can avoid the hassle of moving again. The price tag is significantly higher and your dream home will likely need more upkeep than your starter house, depending upon its age.
Analyze Your Budget
The size of your budget has a direct impact on whether you purchase your forever home or a starter house. If you can only afford a small mortgage each month, you may have to buy a starter home to live within your means. If you have saved up enough money for a sizable down payment, you may be able to afford to purchase the house you’ll live in for the rest of your life. Knowing your budget and the features you desire in a home is important for finding the right house for a particular stage of life.
Understand the Costs of Each Option
Your new mortgage isn’t the only cost associated with purchasing a house. Homeowners insurance is a good investment because it covers the cost of any damage to the structure of your new house. It also covers the cost of any belongings that are stolen and any injuries that are sustained on your property. However, coverage does not extend to home systems or appliances. If you want to avoid unexpected expenses related to your plumbing, heating, electrical and cooling systems, it’s a good idea to consider buying a home warranty. While it’s an additional expense, it can save you money in the long run by dodging unnecessary repair costs.
According to one survey, less than 18% of Americans have home warranty coverage, however arming yourself with the right tools is essential for reducing unnecessary expenses for maintaining a home. When choosing a home warranty, decide which company is best by doing your research. You want to find a company with a great reputation for customer satisfaction. Furthermore, you want to ensure you’re getting excellent coverage for your home’s systems.
For some people, purchasing an affordable starter home is the best option. Others may prefer to go ahead and buy their dream house right out of the gate. There’s no one answer that’s right for everyone, but you must carefully weigh your options if you want to make the best decision for your family. Whether you choose to purchase a starter home or your dream house, purchasing a new place to live is a huge milestone for you! As always, we’re here to help you find the perfect place.
[This content is compliments of Well Parents]