When it's time to purchase your first home, you have a choice to make: do you buy based on your current needs or based on what you want in the future? The home-buying process isn't simple, so before you make your decision, consider all the potential outcomes carefully. Melanie Kishk Realty walks you through the process.
Buying a Starter Home
A starter home is usually a smaller space, and sometimes it's an older home. These homes usually have a smaller price tag and thus a lower down payment. However, you often don't get to choose the amenities you want, you may need to invest in some repairs, and the home may be in a less than desirable location. Beginning with a starter home means you either need to sell later or rent out the space as an income opportunity in the future.
Buying a Forever Home
Conversely, a forever home is usually larger with all the bells and whistles. It's a place you plan to stay for a long time. These homes generally have a much higher price and a larger down payment. With a move-in-ready home, you may not earn equity as quickly as you might with repairs made on a starter home. However, you do get more space and amenities, you can put down roots in a place where you plan to spend many years, and if things go according to plan, you don't need to move again.
Other Considerations
You may be leaning one way or another, but these other minor considerations may push you in a particular direction when considering what type of home to buy.
Pre-Approval
Before you fall in love with a home, it's a good idea to meet with a lender and get a preapproval. Most importantly, this tells you how much you can afford for a home on your salary. It's no fun to fall in love with a house just to realize that it's out of your price range. At the very least, use an online calculator to figure out the correct price range for your home search.
Down Payment
There's no set amount you need to have for a down payment. The down payment amount often depends on the home loan you go with. However, saving enough for a down payment of 20% or more allows you to avoid having to pay private mortgage insurance, which means a greater portion of each mortgage payment goes toward paying off the home.
Moving Services
For many, moving is the most difficult part of buying a new home. If you agree, make sure you add into your budget the cost of movers. Read reviews online before reaching out for quotes. When you're ready to hire, get your entire contract — including pricing — in writing to avoid any issues. Most movers require a home inspection before quoting to be sure the price is accurate.
Protecting Your Investment
It doesn’t matter if you choose a starter home or a forever home. You’ll want to protect your investment by getting homeowner’s insurance and a home warranty. You may think that a homeowner’s insurance policy is enough, and it does provide very helpful coverage. However, it may not cover as much as you think. Insurance will cover damage to the structure itself, stolen items, and injuries that occur on your property. But if you want coverage for major appliances or home systems breaking down (like your HVAC unit), you’ll need a home warranty. There are many options for home warranty companies, but do your research before committing. Make sure that they offer an annual renewable policy that covers breakdowns to your heating, cooling, electrical, and plumbing systems, along with appliance repairs.
Your New Home
Finding a new house can be exciting, whether it's the home of your dreams or just a place for now. Be realistic about what you want and what you can afford, and then work with a skilled real estate professional like those with Melanie Kishk Realty to find the perfect home for your situation.