With home values rising and interest rates still on the historically low side, many consumers are faced with the dilemma: take advantage of the low prices and buy a home now, or keep saving for that dream home? While it can take a long time to save for that perfect home, low rates make housing more affordable, which is why so many buyers are acting fast.
Buying a starter home, as opposed to holding out and saving up for your dream house, is a smart idea. If you purchase a starter home today, you can potentially begin to build equity that can lead to the purchase of a larger trade-up home in the future. Additionally, you might not need that dream home right now. If you’re newlyweds who plan on kids in the future, but don’t need that extra bedroom or huge backyard right now, then you will save money by starting with a smaller home and going bigger only when you need it. By the time you are ready for that dream house, your finances will probably be in better shape making a larger home purchase feasible.
Purchasing a starter home is a great learning experience. You will learn a lot about what you want and need with your first home—was that formal living room or office necessary? While that huge backyard looked great, was the upkeep affordable? Are you really happy with the location?
A start up home is a great jump-off point to learn what it takes to own a home, pay a mortgage, make important financial decisions and build equity. Once you know how to handle owning property, a more expensive purchase will be less stressful.