A major decision for first-time homebuyers is whether to shop for a starter home or a forever home. To determine which is right for you, consider the benefits and drawbacks of each. Today, Jason Mudd is here to help you break it down into simple terms so that you understand the risks and the potential rewards.
Why consider a starter home?
Investing in a smaller, less expensive property as your first foray into real estate allows you to save for the future while still enjoying the benefits of homeownership. While not ideal for every situation, this is an affordable choice that offers flexibility when planning for the future. Starting out with more manageable property yields several advantages:
- A starter home is a budget-friendly option.
- A smaller house requires less maintenance.
- You can rent out or resell your house later for income or profit.
However, while it can be a suitable choice for many, purchasing a smaller home can come with disadvantages:
- Smaller houses have fewer bedrooms and less space for growth.
- A smaller home can be more difficult to resell when you are ready to move on.
- Your new home may require an added initial investment for renovations.
Though they come with limitations, starter homes are a perfect test run for new homebuyers who want to experience property ownership before settling down.
Why consider a forever home?
If your ideal home is one where you plan to spend the whole next phase of your life, you may be in the market for a forever home. When buying your first house, you should weigh all the factors to decide if a more sizable investment is the right move for you. Forever homes come with many great benefits for those operating with a larger budget:
- A forever home can be spacious and typically contains more bedrooms.
- A larger house provides peace of mind when planning for the future.
- A forever home can offer valuable stability as you settle and put down roots.
Purchasing a forever home is a significant investment, though, so it’s worth knowing the potential disadvantages before committing:
- A large property is more expensive and requires a sizable down payment.
- A big house requires regular and sometimes costly maintenance.
- Having a large house offers less flexibility if your plans change in the future.
While it comes with added responsibility, a forever home is perfect for home buyers who enjoy stability in their lives and have the financial resources to cover the costs.
How many houses can you afford?
Knowing how much you need for a down payment gives you a good indication of the price range you can afford for a house. A down payment is the amount you must pay upfront when purchasing a new house, and it’s generally a percentage of the home’s value. It can range from 3.5% to 20%, depending on the specific terms of your home loan. Experts recommend reviewing your loan offer carefully and fully understanding the conditions before deciding.
Also, this isn’t just about down payments and interest rates. Remember to budget for other costs as well. For instance, you’ll need to consider the cost of insurance for homes in Florida, as well as those before-mentioned maintenance costs.
When deciding on a new house, consider the pros and cons of buying a starter home versus a forever home. Your budget, your future goals, and the terms of a home loan should help determine your best course of action. Make sure you understand your upfront and long-term costs to know how much you can afford to spend on your new home.
Jason Mudd would be thrilled to help you find or sell your Amelia Island dream home! Call 904-583-1977.