Starter Home vs Forever Home: Pros & Cons to Know About
The home buying process is hands down very stressful. It involves making too many decisions. But, one of the basic and the most common decisions is the confusion of investing in a starter home or a forever home. But wait, what do these terms exactly mean?
A Real estate agent in San Antonio has compiled a brief about starter homes and forever homes, their pros and cons, and which option will be the best for you. Keep reading till the end to find out!
Starter Homes –
What is a starter home?
A starter home is a home that you do not plan on living in for a long time. It is a smaller home or a condo that you may buy as your first home. This property will typically have 2 bedrooms or 3 bedrooms of which one may be relatively smaller. Generally, a starter home comes as a basic home and may lack a few amenities that you would want. The usual stay period for a starter home will be around 5 years or so.
Investing in a starter home is a popular choice for youngsters as it is less expensive and you can easily afford it without having to wait for years to save up for a down payment. This is the home you plan on buying for now and then move to another city or place once you expand your family or get a job somewhere else.
Buying a home gives you the chance to save enough money and eventually build up on your home equity. You may not be able to do so when you rent.
Advantages of investing in a starter home –
Starter homes are affordable –
Starter homes have a simple home buying process. You have to pay a lot less for a starter home than you would for a home that is larger and more up-to-date. Also, this way your mortgage payments will be a lot more affordable.
Starter homes have lower property taxes –
Property taxes are calculated based on the home’s assessed value which is multiplied by the local tax rate. A starter home comes with lower property taxes as compared to larger homes on the same block or in the same surrounding.
Starter homes need less maintenance –
Large homes mean more time and money to maintain them. If you are new to the all “homeownership” concept, then a starter home will be great to ease this experience. A lot of new homebuyers find that they get overwhelmed financially when they realize the upkeep costs. A smaller home is comparatively safer in this regard.
Starter homes have easier resale –
Top realtors in San Antonio observed that there is a limited inventory available in the real estate market. This makes finding a starter home a bit challenging. But once you do, there will be a good chance to sell it again once you decide to move on, especially if you buy a house in a desirable neighborhood.
Disadvantages of investing in a starter home –
Starter homes have limited space –
Starter homes have smaller space, and for some, it can get uncomfortable if you have kids. While adding onto a starter home can be feasible, local zoning laws and smaller spaces can take the option off the table.
Starter homes need a lot of projects –
There are certain important questions that you need to ask when buying a house. It is not always the case that starter homes will be out of date, but some are. If you buy a house that needs a lot of work, then you may find that all the spare time and money you have will go into renovation for the initial year or two.
Starter home will give you a feeling of “not settled” –
With a forever home, you can picture yourself living there for years to come. But, with a starter home, that’s not the case. Starter homes may leave you feeling unsettled and can also create a scenario where you start questioning every home improvement project you take.
Forever Homes –
What is a forever home?
A forever home is the one you plan on living in for a longer period of time, possibly the rest of your life. Forever homes are larger, possibly with a big deck, large outdoor space, extra storage, and an open backyard. These homes are suitable when you are stable in your career if you are starting a family, etc.
Advantages of investing in a forever home –
Forever homes have low interest rates –
It is a good time to lock in the lower mortgage rate. If you are planning on staying in the home for a longer period of time, you can pay off the mortgage completely and benefit from paying a low rate the whole time.
Forever homes can give you settle down feeling –
Because you are buying this property with the thought of settling for a longer period of time, you can make as many changes as you like. A larger house will have plenty of space for the future. You will not have to worry about space in the future whether having kids, taking care of the elderly, or hosting guests in your house.
Forever homes mean less moving –
The moving process takes up a lot of time and money. It also takes an emotional toll on your children if you are moving far or changing schools. With a forever home, you need not worry about the frequent hassles of moving houses.
Forever homes enable you to put down your roots –
Once you settle down in your forever home, your family can build a lasting relationship and be a part of the community. Your children can be friends with other children in the neighborhood and schoolmates.
Disadvantages of a forever home –
Forever homes are expensive –
Forever homes are larger and nicer than starter homes. Therefore, they cost more money. Right from the mortgage, down payments to its closing costs, everything is a lot expensive. Larger homes also need more maintenance. More maintenance means more money.
You will have to wait for a long time to buy a forever home –
You may not have enough money to cover the down payment and the closing costs for an expensive home. And you should also have some money left post buying a house. That will mean putting the home buying process away for a while.
Forever home does not give you a lot of flexibility –
You purchase a home with the mindset of living here for long. That is why; you need to be sure that you do not plan on moving for the next few years. If you do so, you will end up losing a lot of money. You are already paying for the down payment, closing costs, and also the interest on the mortgage, with no time to build equity in your new house.
What is the right move for you?
Deciding whether to buy a starter home or a forever home is not easy. You need to consider the following factors before making a choice –
- Budget – How much can you afford is the big question here. Typically, a starter home is a lot cheaper than a forever home.
- Lifestyle – Are you someone who LOVES spending time at home a lot? If the answer is YES, then less space is not ideal for you. However, if you are someone who uses their home only to eat and sleep, then space should not be a problem. You can free up more money to enjoy other things of leisure and entertainment.
- Family situation – If you plan on expanding your family, you can outgrow your starter home real quick.
- Down Payment – If you do not have a lot of money to secure the down payment of the house, a starter home can be right for you as it allows you to be the homeowner and stop wasting money on rent.
Read here to learn about the mistakes to avoid in a hot market when buying a house.
The bottom line –
Based on the factors mentioned above, you can choose between a starter home and a forever home and decide your best option. Do not forget to get in touch with a Real Estate Agent in San Antonio and choose the home that fits your current situation.