Buying your first home can be a very exciting process, but also a hassle if you enter the process unrealistically. We are taught that buying a home is an asset that will help you save money in the long run, but this is only true in certain scenarios. USA Today recently posted what many of us have already noticed via social media. Many millennials are “bypassing the traditional gateway to homeownership – the starter, or entry-level, home – and buying larger, more expensive houses.” If you’re deciding or pondering about purchasing any home, starter or forever, read this first and then make some thoughtful considerations
1. Are you financially responsible for homeownership?
While homeownership has perks during taxes such as deducting your mortgage interest, it also comes with a list of maintenance fees that become overwhelming if you’re not prepared. In addition to your monthly mortgage, there is lawn care cost, insurance, exterior and interior upkeep, and duh…utilities. Many of these necessary requirements to maintain your new property can be done by you or a spouse, but if you are not financially prepared it can cost more than you bargain for. The larger the square footage of your home, your utility, and insurance costs will increase.
2. Will you live alone?
I wholeheartedly believe that no man or woman should wait for the “perfect” mate or marriage to purchase their first home. However, take into consideration when purchasing your forever home, that your future spouse may not want to particularly live in the forever home that you chose alone. They were not given a choice in the final decision of their lifelong home. One of the perks of marriage is making lifelong decisions together. Purchasing your forever home alone, excludes your future mate from this decision and can cause some resentment years into the marriage.
3. Will your community change in the next 10 years?
My husband and I purchased our starter home, that we currently live in, when we’re 24 and 25 years old. We were newlyweds of 1 year and did not want to waste any more time or money renting our condo. We live in a fairly large college driven city and desperately wanted to be away from the excitement of it all. After searching for months we found a family friendly community near shopping and good schools. Fast forward to the present day, our desires and concerns have changed. That happens with age, the birth of children, and life experiences. When taking a leap into purchasing any home, starter or forever, be prepared that you may change your mind. To say that you are settled in a city, neighborhood, or home forever is never a total guarantee.
4. Can you afford the house on YOUR own salary?
Buying a home takes money, patience, and wisdom. Purchasing a smaller “starter” home is normally financially feasible for obvious reasons such as square footage, location, and desirability of other buyers. Most buyers buy with the intent of happiness, but also with the expectation of being able to move on to bigger and better. If you do start with your forever home make sure that you take your spouses or your income changes into consideration. When we purchased our home, we made sure to consider that in the event that if one of us became ill, or unemployed, the other spouse would still be able to afford the cost of the home, including other living expenses that will occur. You can avoid being “house poor” with smart and realistic decisions in your journey to homeownership.
5. Will you or your spouse care for aging or elderly relatives?
If you buy a small starter home that is only enough room for your spouse, children, and yourself, that is normally not the ideal space capacity for maturing or elderly family members to reside with you. This is one of the perks of purchasing a forever home. A forever home that may be slightly or remarkably larger than your starter home. The forever home accommodates things that you desire for the remainder of your life including adding other people to live with you. If you believe that you will be solely responsible for caring for elderly family members, consider a space for them in your forever home.
6. Now you know exactly what you want in your home?
If you never purchase or live in a home of your own you may never know what actually works for you! Purchasing a starter home gives you the opportunity to try things out for a while. I can’t tell you how many times I’ve heard people say what they wished they had in their home. Living in a starter home for a year or longer gives you an idea of what works and what doesn’t work for your family. Also, be open to the idea of having a contractor remodel your home if moving is not financially feasible.
7. Do you want an asset or a liability?
Most of us are taught at a fairly young age that our homes are an asset. However, your home is not, in fact, an asset until it is completely paid in full. The mortgage that you currently have in a starter home or forever home is now considered a debt. Depending on how much money you borrow from your mortgage lender, you may actually have a harder time paying off other debts such as credit cards, car payments, or loans. The benefit of having a starter home includes paying off the debt faster which in return provides you with an asset to be proud of. You can now save more money on your monthly expenses or even make more money by renting your newly owned property. If you live in a desirable area, safe neighborhood, or are totally content with your starter home, once it becomes an asset, it may actually be a financially smarter move to continue to reside in your home.
8. Remember, it’s just a name.
Who’s opinion became a trending fact that a starter home is small, dark, and unwanted? Some starter homes are perfect for a forever home for so many people. If you plan to have 4 children, but fate gives you 2, you may find that you have more than enough rooms in your home for well, forever! Homeowners also add additional rooms, levels, and designs to starter homes that give them a totally new feel and meet every expectation that they want in a newer home. If your starter home is perfect for your forever home don’t succumb to the pressures of social media, articles, or your friends to add an additional debt to your life. After all, most people desire to downsize when they reach retirement age. The irony of it all!
9. Do your parents a favor!
If you are millennial that has lived or mooched off your parents well into your adult years without paying any rent or utilities, make sure that you pay it forward for them. They have cared for you and helped you to be able to make your dream of homeownership come true. As a parent, it makes my heart happy knowing that my child has succeeded, but don’t forget to thank us for helping you move forward in a very big way!