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Starter vs. Forever
A starter home is a more modest house that you expect to outgrow. Starter homes are often condominiums, townhomes, or small detached homes.
A forever home is, as the name suggests, a house you can live in forever. It fulfills the needs of a growing family and usually includes all your desired features.
In 2019, a trend emerged among millennial home-buyers in which many of them skipped a starter home and purchased their forever home. These days, with home prices still on the rise, going with a starter home might be best. So what are the pros and cons of each option?
Starter Homes: Pros
- More affordable. Affordability is the biggest advantage of buying a starter home first.
- Less upkeep. Starter homes are typically smaller, with smaller or no yards.
- Less commitment. Knowing that you’ll eventually upgrade takes some pressure out of the selection process. If a home lacks the desired features, no problem! You can build equity and sell when the time is right.
- Potential future investment. Instead of selling when it’s time to upgrade, you can keep your starter home as a rental property to earn extra income.
Starter Homes: Cons
- Smaller size. Smaller homes with fewer bedrooms may not fulfill a growing family’s needs.
- More work. Buying an affordable home “as-is” often means it’s in need of updates and repairs.
- More difficult to sell. Many starter homes are in less desirable locations or need work, making them harder to sell later.
Forever Homes: Pros
- Staying power. You can establish yourself in the home, knowing you don’t have to move again.
- Ability to grow. If you want to get married, have children, or adopt pets, your current home supports this growth.
- Make it your own. You can decorate and renovate according to your tastes, without having to consider what appeals to future buyers.
Forever Homes: Cons
- Higher cost. Forever homes are typically larger, in desired locations, and have better features, making them less affordable.
- More upkeep. There’s more interior and exterior space to care for.
- Bigger commitment. If your situation changes, and you need to move sooner than planned, having a more expensive home may mean you haven’t built up equity, and you may lose money in the sale.
How To Get Started
Regardless of the type of home you choose, you must do several things before beginning the home-buying process.
- Find a trustworthy real estate agent.
- Use an online calculator to determine how much home you can afford.
- Gather any paperwork necessary to apply for a home loan.
- Get pre-approved for a home loan. This can take 30 days or more, so it’s best to start as soon as possible.
Knowing the difference between starter and forever homes is a great first step in the homebuying process. After gathering the necessary paperwork and beginning the pre-approval process, all that remains is the fun part: Searching for a new place!
Check out the Prosperous Frugal blog for tips on saving money for a big purchase, including a first home.
Article by Sarah Bull from EconomyMom.com.