So, you’re ready to buy your first home. For many first-time buyers, one of the main questions they consider is whether to buy a starter home or a forever home. Is it better to dip your toes in or go all in?
Some recent statistics show that first-time homebuyers made up one-third of the market in 2019. Across the United States, the median salary for a homeowner is $72,000 while renters’ sat around $35,000. If those numbers feel a bit discouraging, it’s important to remember that there are many paths to owning a home.
There’s no one-size-fits-all answer to which option is best. It depends on your goals and your current situation. With the information below, you can start to decide whether your first home is a starter or a forever home.
What Is a Starter Home?
Typically, a starter home is a condominium or a small house bought as a first home. Often, these properties have two bedrooms and don’t have all the amenities the owner might want. Alternatively, the location might not be ideal
Still, this option is popular among young homebuyers because it offers an affordable entrance to owning a home. They don’t have to spend years saving up for the down payment.
With a starter home, you have the opportunity to save money and build equity, which you cannot do when you rent.
What Is a Forever Home?
Forever homes are where you imagine your life for a very long time. Unlike starter homes, these have almost everything you want. For instance, it may have more bedrooms, easy access to public transit, a backyard, or a larger kitchen. Generally, these are more expensive but also have a stronger resale value.
Which Option Is Right for You?
As with most risky decisions, it’s a good idea to look at a list of pros and cons. Various factors in life impact the decision, and these lists offer good insight. However, it’s common for people’s perspectives to change in the middle of house hunting.
While you initially start to look for a starter home, you might stumble across your forever home. When you know, you know, right?
Starter Home Pros
- Lower commitment: You have the opportunity to gain experience as a homeowner and see what it takes to manage your own property.
- Price point: Starter homes are more affordable, so you don’t have to save up for a larger down payment.
- Reduced upkeep: Smaller homes require less maintenance.
- Pivot to investment: Starter homes can be a solid investment if you decide to keep it when you move.
- Property tax: Starter homes tend to have lower property taxes.
Cons of Starters
- Harder to sell: These homes tend to be in locations that aren’t ideal, which can cause issues if you decide to sell.
- Small: These are smaller than what many consider forever homes, so you might not have the space you need.
- Repairs: Usually, these properties need a bit of work, so get an inspection before you buy.
Forever Home Pros
- Customizable: Your home, your rules, so you can feel comfortable customizing your home with the features that suit your life.
- No moving: Moving requires time and money, not to mention frustration.
- Grow into the size: Typically, these properties are bigger, so you have room to grow.
- Set your roots: Build community and lasting relationships with your neighbors.
Forever Home Cons
- Higher price: Be ready to spend more because these can put a squeeze on your finances.
- Slower ROI: With move-in ready homes, you cannot build equity through remodels as quickly.
- More upkeep: Bigger homes mean more upkeep and maintenance.
Deciding What’s Right For You
Starter homes are more affordable but tend to be smaller. On the other hand, forever homes are meant to last forever. Deciding what’s right for you takes time and a thorough examination of your finances.