|How To Choose Between A Starter And Forever Home
When it’s time to buy your first house, you have two real options: find a “starter” home or pick something larger that you can grow into. Each has pros and cons, and there are a lot of things to factor in before you make a decision. Here are some tips that will help you make the best decision for your family.
Before you even think about buying a home, it’s important to understand the current real estate market in your area. To assess the current real estate market, it’s important to take into account the overall local economy and housing trends, analyze recent listing and sale prices in the area, consider recent buyer demand, and look at past sales data. Comparing all of this information can help you gain a better understanding of the current real estate market.
Smaller May Be Better
There are many reasons that buying a smaller home may work for your family. For one, they are less expensive. And if you and your partner are in the 25% of couples that decide not to have kids, you simply may not need more space. This doesn’t mean that you can’t expand later on, and it might be less expensive to build an addition than to sell and buy a larger home if you decide you need a home office, workspace, or home gym.
Go Big (And Be Home)
Let’s say that you plan to have children within the next five years. This is a situation when choosing a larger home with room to spread out makes sense. Southdown Homes notes that each person should have anywhere between 200 and 400 sqft of living space, or a home of up to 2400 sqft. This is enough to ensure everyone has a private bedroom, a place to play, and, if necessary, a home office.
The downside of having a large home: the cost. A larger area means more things that could possibly break, and it’s also harder to keep it heated and cooled without blowing your budget. USA Today offers several money-saving tips, including lowering your hot water heater temperature and changing out your HVAC filters. If your mortgage and utility bills are too high, you may have to save in other places, such as cutting back on cable or paying off your vehicle/credit cards to free up money each month and avoid continually climbing interest rates.
What Can You Afford?
A final consideration, no matter which size home you choose, is that interest rates are rising. If you have yet to buy, don’t wait. Interest rates may continue to go up, and even a quarter of a point can have a huge impact on your monthly expenses. On a $400,000 house, moving from a 5.25% interest to a 5.5% interest rate can add around $70 to your monthly payment. Bump up to 6%, and that same house costs you almost $200 more each month.
It’s a good idea, once you figure out how much house you want, to determine how much house you can afford. Home buying has multiple fees and costs to consider, so determining how much you can spend on a home isn’t as simple as obtaining a mortgage for the value of the asking price minus your down payment.
If you’ve never bought a home before, you may have questions about how mortgages function. There are a host of different types of home loans available, each with different terms and buyer types that they serve. It’s wise to do your own research before applying for a mortgage, and possibly speak to several lenders as well.
If you still have questions, don’t be afraid to ask your Realtor for advice. While no one can tell you which house is right for your family, your agent can listen to your situation, help you evaluate your budget and available properties, and point you in the right direction. Remember, there are expenses no matter which home you choose, you just have to decide which bills you’re most comfortable with from the beginning.
Image via Pexels
Author: Natalie Jones
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Buying • Real Estate • March 3, 2023
How To Choose Between A Starter And Forever Home
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