When young professionals are looking to transition from monthly rentals to owning a property of their own, they usually buy small-scale, affordable properties, rather than a “forever home.” However, a beginner home or condo isn’t exactly a minor expense by any stretch of the imagination. That’s why it’s extremely essential to sift through the facts and dispel every myth before deciding that a starter home is the best decision for you.
What to Consider before Purchasing a Starter Home
Costs and Savings
One of the primary reasons that first time homebuyers seek starter homes is the relatively low price to obtain them. By comparing monthly rental prices to potential mortgage and closing costs, you should be able to determine which option makes more sense for you financially.
The Market
It’s also wise to check on the status of the housing market. Depending on its condition, the country will either be in a buyer’s or seller’s market, which should ultimately help you determine if the timing is right.
After all, there’s no sense in splurging on a starter home during a seller’s market. However, if you purchase your home during a buyer’s market, you can expect a significant return-on-investment when it’s finally time to sell.
Furthermore, try to find out how much you can actually spend on a down payment. While you probably don’t have enough funds for your dream home, you can potentially afford a starter property. During your time as a homeowner, you will be building up equity for your next big home purchase.
Your Unique Situation
There’s no universal answer to whether or not a prospective buyer should purchase a starter home because everyone’s situation is vastly different. That’s why you really need to determine if this type of home is worth it, depending on if your finances allow it.
For instance, many people kick their monthly rental to the curb over the very basic need for more space. In situations like these, maybe storage is a necessity or your family is growing. Either way, a one bedroom apartment isn’t going to cut it.
No matter your situation, you really need to put in some serious time and effort before making the final leap. The last thing you want is to be too far gone before realizing that you made the wrong choice.
From Starter to Future Home
Sometimes, life doesn’t exactly go as we plan. Occasionally, people will purchase starter homes, only intending to live there for a few years until they’re on their feet. Then, before they know it, they’ve lived there for 50 years.
Of course, people can fall in love with properties over the years. You may buy a home and think you’ll only live there for five years, tops. Then slowly, those five years become 10 years and so on and so forth. The truth is that we are never certain how our lives and the market will change from day-to-day.
Therefore, it’s probably a wise idea to buy a starter home if you can. It may not seem lucrative at the time but, if you put proper care and dedication into it, you should expect its value to greatly appreciate.
