Should I Buy a Starter House or a House I Want to Live in Forever?
If you’ve saved diligently and have enough money to cover a down payment, now may be one of the best times to buy a house that you’ll see in your lifetime. As you probably know, interest rates are low, and in most areas, prices are down quite a bit from their peak approximately five years ago.
If this is your first house and you’re looking ahead to potentially starting a family in the next few years, you may be debating whether you should buy a starter house or one that you plan to stay in indefinitely, even after you’ve added to your brood. There are pros and cons to both decisions, so here are some things to consider as you weigh your options:
Buy a Starter House
A bigger house means bigger expenses. Typically, the bigger your house and property, the higher your taxes and maintenance will be and if you don’t have the need for those extra bedrooms or that big backyard. You may be better off delaying these added expenses until a few years down the road. Your taxes may be especially high if your neighborhood has good public schools, so you’ll be footing education costs for your kids before you really need to.
Keep your budget flexible. Lower housing payments mean you’ll have more room in your budget to make decisions for your family about things like home improvements, eating out, vacations, having one parent stay at home, etc.
Buy a House for the Long Haul
Interest rates will probably rise. If you have a chance to lock in a mortgage at an incredibly low rate now, it’d be a shame to give that up in five to seven years when you’re in need of a home with more space.
Property values may start to rise again. This is highly speculative and will depend largely on the area in which you are looking to live, but if you think your property will appreciate over time, a larger house will typically see greater gains.
Moving costs money. Moving costs aren’t insignificant, and if you move twice in five to seven years, you’re going have to pay twice for things like broker fees, packing/moving costs, and furniture/redecorating expenses.
There’s no one right decision for everyone but make sure you think through all of your options before committing to such a big decision!
The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.